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Money growth rules and price level determinacy

Charles Carlstrom and Timothy Fuerst

No 10, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: The authors show that in a plausibly calibrated monetary model with explicit production, exogenous money growth rules ensure real determinacy and thus avoid sunspot fluctuations. Although it is theoretically possible to construct examples in which real indeterminacy does arise, these examples rely on implausible money-demand elasticities or ignore the effect of production on the model?s dynamics.

Keywords: Monetary policy; Demand for money (search for similar items in EconPapers)
Date: 2000, Revised 2000
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Journal Article: Money Growth Rules and Price Level Determinacy (2003) Downloads
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