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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- 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.
- Jean-Michel Grandmont & Yves Younes, 1972. "On the Role of Money and the Existence of a Monetary Equilibrium," Review of Economic Studies, Oxford University Press, vol. 39(3), pages 355-372.
- 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.).
- Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-20, April.
- Jean-Michel Grandmont & Guy Laroque, 1975.
"On Money and Banking,"
Review of Economic Studies,
Oxford University Press, vol. 42(2), pages 207-236.
- Bryce Hool, 1976. "Money, Expectations and the Existence of a Temporary Equilibrium," Review of Economic Studies, Oxford University Press, vol. 43(3), pages 439-445.
- Dubey, Pradeep & Geanakoplos, John, 2003.
"Monetary equilibrium with missing markets,"
Journal of Mathematical Economics,
Elsevier, vol. 39(5-6), pages 585-618, July.
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