MacKinnon, Keith; Smithin, John - In: Journal of Macroeconomics 15 (1993) 4, pp. 769-785
This paper models a "credit economy" in which the only exchange media are bank liabilities created as a by-product of the demand for finance by firms. Monetary policy involves the "pegging" of interest rates and, since there is no "natural rate" of interest in the model, is non-neutral. If the...