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Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions

Kengo Nutahara

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: 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.

Pages: 14 pages
Date: 2010-12
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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https://www.rieti.go.jp/jp/publications/dp/10e060.pdf (application/pdf)

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Working Paper: Asset prices and monetary policy in a sticky-price economy with financial frictions (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:10060

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