Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions
Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)
A recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arise if the working capital of firms is subject to their asset values by financial frictions.
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Working Paper: Asset prices and monetary policy in a sticky-price economy with financial frictions (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:10060
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