Money and production, and liquidity trap
We prove the existence of monetary equilibrium in a finite horizon economy with production. We also show that if agents expect the monetary authority to significantly decrease the supply of bank money available for short term loans in the future, then the economy will fall into a liquidity trap today.
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Volume (Year): 2 (2006)
Issue (Month): 3-4 ()
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References listed on IDEAS
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- Lucas, Robert E, Jr & Stokey, Nancy L, 1987.
"Money and Interest in a Cash-in-Advance Economy,"
Econometric Society, vol. 55(3), pages 491-513, May.
- Robert E. Lucas Jr. & Nancy L. Stokey, 1984. "Money and Interest in Cash-In-Advance Economy," Discussion Papers 628, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Robert E. Lucas, Jr. & Nancy L. Stokey, 1985. "Money and Interest in a Cash-in-Advance Economy," NBER Working Papers 1618, National Bureau of Economic Research, Inc.
- Hool, Bryce, 1976. "Money, Expectations and the Existence of a Temporary Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 43(3), pages 439-45, October.
- Grandmont, Jean-Michel & Younes, Yves, 1972. "On the Role of Money and the Existence of a Monetary Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 39(3), pages 355-72, July.
- Pradeep Dubey & John Geanakoplos, 2003.
"Monetary Equilibrium with Missing Markets,"
Cowles Foundation Discussion Papers
1389, Cowles Foundation for Research in Economics, Yale University.
- Grossman, Sanford J & Hart, Oliver D, 1979.
"A Theory of Competitive Equilibrium in Stock Market Economies,"
Econometric Society, vol. 47(2), pages 293-329, March.
- Sanford Grossman & Oliver Hart, 1978. "A theory of competitive equilibrium in stock market economies," Special Studies Papers 115, Board of Governors of the Federal Reserve System (U.S.).
- Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
- Grandmont, Jean-Michel & Laroque, Guy, 1975. "On Money and Banking," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 207-36, April.
- Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-20, April.
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