Economic Stability and Interest-Rate Controls in an Open-Economy Model with Productive Money
AbstractWe analyze the relation between interest-rate controls and equilibrium determinacy in a two-country model in which money is employed as a factor of production. Given this specification, holding cash generates an opportunity cost. Therefore, equilibrium can be indeterminate even if both countries demonstrate additive-separable utilities between consumption and non-productive money.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 4 ()
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Taylor rule; productive money; equilibrium determinacy; open economy.;
Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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- Fujisaki, Seiya, 2012. "Interest Rate Control Rules and Macroeconomic Stability in a Heterogeneous Two-Country Model," MPRA Paper 37017, University Library of Munich, Germany.
- Allen Sinai & Houston H. Stokes, 1989. "Money Balances in the Production Function: A Retrospective Look," Eastern Economic Journal, Eastern Economic Association, vol. 15(4), pages 349-363, Oct-Dec.
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