Money and indeterminacy over an infinite horizon
Jacques Dreze and
No 2002021, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)
Money provides liquidity services through a cash-in-advance constraint. The exchange of commodities and assets extends over an infinite horizon under uncertainty and complete asset market. Monetary policy sets the path of rates of interest and accommodates the demand for balances. Competitive equilibria exist. But, for a fixed path of rates of interest, there is a non-trivial multiplicity of equilibrium paths of prices of commodities. Determinacy requires that, subject to no-artibrage and in addition to rates of interest, the prices of state-contingent revenues be somehow determined.
Keywords: money; equilibrium; indeterminacy; monetary policy; ﬁscal policy (search for similar items in EconPapers)
JEL-codes: D50 E40 E50 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2002021
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