Inside versus outside money: indeterminacy in GEI models
AbstractIn this paper I consider the issue of indeterminacy of equilibrium in a general equilibrium model with incomplete markets and nominal assets. First, I present some classic results on nominal and real indeterminacy in those models. I then proceed to analyse a more recent literature that focused on the role of money in eliminating indeterminacy of the price level. I show that determinacy depends crucially on the presence of outside money in the economy. I also point out some of the limitations of this literature and some possible way out. In the last part I present a paper that deals with indeterminacy in an altogether different way, namely introducing non-competitive intermediaries that design assets and price them.
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Bibliographic InfoPaper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 62.
Date of creation: Feb 2002
Date of revision:
GEI; indeterminacy; money.;
Find related papers by JEL classification:
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
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