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Animal Spirits in Cash-in-Advance Economies

Stefano Bosi (), Frédéric Dufourt () and Francesco Magris
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Stefano Bosi: EPEE, University of Evry

No 02-05, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: The empirical relevance of indeterminacy and sunspot fluctuations has been often questioned on the basis of the implausibly high degrees of increasing returns to scale or unconventional calibrations for the fundamentals required. In this paper we study a one-sector economy with partial cash-in-advance constraint on consumption expenditures, and show how such phenomena are by contrast quite pervasive: They appear for arbitrarily small amplitudes of the liquidity constraint, whatever the specification for the fundamentals is. At the same time we asses the cyclical properties of the model by allowing simultaneously technological and beliefs disturbances and observe that it performs as well as other indeterminate models.

Keywords: cash-in-advance; indeterminacy; business cycles (search for similar items in EconPapers)
JEL-codes: D90 E32 E41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2002
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http://epee.univ-evry.fr/RePEc/2002/02-05R.pdf (application/pdf)

Related works:
Journal Article: Animal spirits in cash-in-advance economies (2007) Downloads
Working Paper: Animal spirits in cash-in-advance economies (2007) Downloads
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