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.
|Date of creation:||Jul 2006|
|Publication status:||Published in International Journal of Economic Theory (2006), 2(3/4): 295-317|
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