Coordination, Fragility, High-Powered Money, and the Liquidity Trap: A "Tobinesque" Parable

John Bryant

Eastern Economic Journal, 2005, vol. 31, issue 1, 97-106

Abstract: This paper provides a simple model of fragility in which recession, triggered by demand for high-powered money, generates a liquidity trap. Moreover, in this liquidity trap parable, it is its assured store of value that is the critical attribute of high-powered money and not, perhaps, "liquidity services" per se at all. Thus, a rather "Tobinesque" liquidity trap is portrayed. The crucial ingredients in the model are simple, standard forms of production complementarities.

Keywords: Money; Recession (search for similar items in EconPapers)
JEL-codes: E32 E40 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:31:y:2005:i:1:p:97-106

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