Li, Geng - Federal Reserve Board (Board of Governors of the … - 2007
time 0, U(Ct) is the
intratemporal utility function, r is the real interest rate and fl is the subjective discount rate.
I …
cash or assets. The nominal interest rate for cash is zero. For the time being, I assume that
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the asset bears a risk … free real interest rate, r. The nominal interest rate, i, is equal to r +…,
where … is the in ation rate. Interest is …