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Liquidity Effects in Non-Ricardian Economies

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  • Jean-Pascal Bénassy

Abstract

It has often been found difficult to generate a liquidity effect (i.e., a negative effect of monetary injections on the nominal interest rate) in the traditional "Ricardian" stochastic dynamic model with a single infinitely lived household. We show that moving to a non-Ricardian environment where new agents enter the economy in each period allows such a liquidity effect to be generated. Copyright The editors of the "Scandinavian Journal of Economics", 2006 .

Suggested Citation

  • Jean-Pascal Bénassy, 2006. "Liquidity Effects in Non-Ricardian Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 65-80, March.
  • Handle: RePEc:bla:scandj:v:108:y:2006:i:1:p:65-80
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    Cited by:

    1. Araújo, Eurilton, 2013. "Robust monetary policy with the consumption-wealth channel," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 296-311.
    2. Ascari, Guido & Rankin, Neil, 2007. "Perpetual youth and endogenous labor supply: A problem and a possible solution," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 708-723, December.

    More about this item

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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