IDEAS home Printed from
   My bibliography  Save this article

Money Supply in a Simple Economic Growth Model and Multiple Steady States Equilibria


  • Laurent Augier, Jalloul Sghari

    () (Université de Caen, France)


We intend to examine a monetary economic growth model à la Sidrauski- Brock where money is introduced both in the utility function and the production function. We assume that utility is derived from the flow of services derived from real money holdings and that money is held by firms to facilitate production. We show that the level of equilibrium depends on the rate of discount. We give conditions to guarantee uniqueness of the equilibrium. We demonstrate that the unique equilibrium is either a classical « saddle point » or a « source point »; that the introduction of money in the utility and production function is sufficient to produce multiple stationary equilibria; and that the initial stock of money appears as an important economic control variable. Therefore, the initial amount of the monetary emission issued by the central bank becomes essential for the long run economic equilibrium properties.

Suggested Citation

  • Laurent Augier, Jalloul Sghari, 2009. "Money Supply in a Simple Economic Growth Model and Multiple Steady States Equilibria," Frontiers in Finance and Economics, SKEMA Business School, vol. 6(2), pages 67-95, October.
  • Handle: RePEc:ffe:journl:v:6:y:2009:i:2:p:67-95

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    economic growth; money; multiple equilibria.;

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ffe:journl:v:6:y:2009:i:2:p:67-95. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sophie Bodo). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.