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Indeterminacy of equilibrium allocations in monetary open economies

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  • SALTO, Matteo

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

In an open economy, outside money in positive supply does not eliminate the real indeterminacy which arises under uncertainty and incomplete asset markets. If money supply is subject to shocks or is not perfectly credible in all countries, the level of a fixed exchange rate matters. Analogous results obtain in cash-in-advance models.

Suggested Citation

  • SALTO, Matteo, 1998. "Indeterminacy of equilibrium allocations in monetary open economies," LIDAM Discussion Papers CORE 1998062, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1998062
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    References listed on IDEAS

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    More about this item

    Keywords

    Incomplete markets; exchange rates; monetary economy.;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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