Habit Persistence, Money Growth Rule and Real Indeterminacy

Stéphane Auray, Fabrice Collard and Patrick Fève

Review of Economic Dynamics, 2005, vol. 8, issue 1, 48-67

Abstract: This paper studies the dynamic properties of a standard cash-in-advance model modified to include habit persistence over preferences. The central bank is assumed to follow an exogenous money growth rule. We show that equilibrium real indeterminacy is more likely to occur when habit persistence is high enough. We then establish that, in contrast to the standard CIA model, the implied sunspot dynamics may be non-oscillatory. This result is robust against alternative specifications provided the rigid CIA assumption is maintained. (Copyright: Elsevier)

Keywords: Habit persistence; Cash-in-advance; Exogenous Money Growth Rule; Real indeterminacy (search for similar items in EconPapers)
JEL-codes: E21 E32 E4 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2004.10.007 Full text (application/pdf)
Access to full texts is restricted to ScienceDirect subscribers and ScienceDirect institutional members. See http://www.sciencedirect.com/ for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:v:8:y:2005:i:1:p:48-67

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2004.10.007

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().