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Government Financing and Interest Rates in a Three Assets Sidrauski-based Model

Author

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  • Eduardo Pozo

    (University of Zaragoza, Spain)

Abstract

In this paper we formulate a Sidrauski-based model with three assets in which we introduce public bonds into the utility function of agents, with the purpose of analyzing some related questions with regards to the consequences of the financial activity of the government and the determination of the interest rates. The results obtained permit us to conclude that, within this framework: 1.-financial decisions of government will not influence the steady state levels of consumption and capital, and 2.-the inflation rate affects the real interest rate on bonds negatively.

Suggested Citation

  • Eduardo Pozo, 2000. "Government Financing and Interest Rates in a Three Assets Sidrauski-based Model," Macroeconomics 0004017, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0004017
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on A4 paper; pages: 12
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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