Asset prices and monetary policy in a sticky-price economy with financial frictions
A recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arises if the working capital of firms is subject to their asset values by financial frictions.
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- repec:ebl:ecbull:v:5:y:2007:i:18:p:1-9 is not listed on IDEAS
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