Indeterminacy and Cycles in a Cash-in-Advance Economy with Production

Gaetano Bloise, Stefano Bosi () and Francesco Magris
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Stefano Bosi: EPEE, Université d’Evry-Val d’Essonne

No 99-06, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: In this paper we study the determinacy of price level, nominal and real interest rate and income, in an economy with productive capital and cash-in-advance constraint on consumption purchases. In particular, we show that under mild assumptions on preferences and production sets there may arise a continuum of equilibria converging to the unique stationary solution, which is therefore locally indeterminate, as well as deterministic cycles. Similar results are observed when sustained growth, in view of the presence of aggregate externalities in capital utilization, is accounted for.

Keywords: cash-in-advance; indeterminacy; growth (search for similar items in EconPapers)
JEL-codes: D90 E32 E41 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1999
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:99-06

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