Inside versus outside money: indeterminacy in GEI models

Leo Ferraris ()

No 62, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: In this paper I consider the issue of indeterminacy of equilibrium in a general equilibrium model with incomplete markets and nominal assets. First, I present some classic results on nominal and real indeterminacy in those models. I then proceed to analyse a more recent literature that focused on the role of money in eliminating indeterminacy of the price level. I show that determinacy depends crucially on the presence of outside money in the economy. I also point out some of the limitations of this literature and some possible way out. In the last part I present a paper that deals with indeterminacy in an altogether different way, namely introducing non-competitive intermediaries that design assets and price them.

Keywords: GEI; indeterminacy; money. (search for similar items in EconPapers)
JEL-codes: D52 (search for similar items in EconPapers)
Pages: 31
Date: 2002-02
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