Real Indeterminacy of Stationary Monetary Equilibria in Centralized Economies
So Kubota and
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Kazuya Kamiya: Kobe University
So Kubota: Princeton University
Kayuna Nakajima: Bates White, LLC
The Japanese Economic Review, 2017, vol. 68, issue 4, No 5, 497-520
Abstract We show that real indeterminacy of stationary equilibria, by which the set of stationary equilibria is a continuum and the real allocation varies among equilibria, may arise in some general equilibrium models with fiat money. The conditions under which such equilibria arise are: (i) each household optimally saves a constant amount of money; and (ii) at least two households face different budget constraints. We present various models, including a decentralized money search model and a centralized model with a monopoly firm, to explain how these conditions lead to real indeterminacy. Finally, we present a policy that uniquely implements any desirable outcome.
Keywords: D51; E40 (search for similar items in EconPapers)
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