Monetary Policy and Equilibrium Indeterminacy in a Cash-in-Advance Economy with Investment

In a cash-in-advance economy where cash is required in advance of purchasing both consumption and investment goods, we find that active interest rate rules generate equilibrium uniqueness, but passive rules can lead to real indeterminacy. Simulation shows that even in the presence of investment, passive rules are very likely to render indeterminacy.

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Year of publication:	2004-01-15
Authors:	Yip, Chong Kee ; Li, Ka Fai
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 5.2004, 2, p. 1-7
Publisher:	AccessEcon
Subject:	indeterminacy

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Extent:	application/pdf
Type of publication:	Article
Classification:	E5 - Monetary Policy, Central Banking and the Supply of Money and Credit ; O4 - Economic Growth and Aggregate Productivity
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010629828