KANG, Minwook - Division of Economics, Nanyang Technological University - 2014
An economy with incomplete ?nancial markets, as described by Cass (1989), typically has in?ation volatility driven by … sunspots. The purpose of this paper is to investigate how the introduction of in?ation- indexed bonds to the ?Cass?economy in … the monetary market can never shut down even with a very high level of in?ation volatility if the indexed bonds have …