Asset prices and monetary policy in a sticky-price economy with financial frictions

A recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arises if the working capital of firms is subject to their asset values by financial frictions.

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Year of publication:	2010-04-05
Authors:	Nutahara, Kengo

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Type of publication:	Book / Working Paper
Language:	English
Notes:	Nutahara, Kengo (2010): Asset prices and monetary policy in a sticky-price economy with financial frictions.
Classification:	E32 - Business Fluctuations; Cycles ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; E44 - Financial Markets and the Macroeconomy ; C62 - Existence and Stability Conditions of Equilibrium
Source:	BASE

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