Money, banks and endogenous volatility

Pedro Gomis-Porqueras

Economic Theory, 2000, vol. 15, issue 3, 735-745

Abstract: In this paper I consider a monetary growth model in which banks provide liquidity, and the government fixes a constant rate of money creation. There are two underlying assets in the economy, money and capital. Money is dominated in rate of return. In contrast to other papers with a larger set of government liabilities, I find a unique equilibrium when agents' risk aversion is moderate. However, indeterminacies and endogenous volatility can be observed when agents are relatively risk averse.

Keywords: Spatial separation; Endogenous volatility; Incomplete insurance. (search for similar items in EconPapers)
JEL-codes: E44 E52 (search for similar items in EconPapers)
Date: 2000-04-13
Note: Received: March 11, 1999; revised version: March 30, 1999
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Citations: View citations in EconPapers (7)

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