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Money and Monetary Policy in General Equilibrium

Author

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  • DREZE, Jacques H.

    () (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • POLEMARCHAKIS, Heracles M.

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

The introduction of banks which issue and supply balances and payout their profits as dividends is the natural modification of the competitive equilibrium model developed by Arrow and Debreu which encompasses monetary economies. Equilibria in which money serves as a medium of exchange, and possibly only as such, exist. But they are. typically. suboptimal and indeterminate. There is an optimal monetary policy.

Suggested Citation

  • DREZE, Jacques H. & POLEMARCHAKIS, Heracles M., 1994. "Money and Monetary Policy in General Equilibrium," CORE Discussion Papers 1994080, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:1994080
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-1994.html
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    Keywords

    money. banks. equilibrium;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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