Determinacy of Interest Rate Rules with Bond Transaction Services in a Cashless Economy
Massimiliano Marzo () and
No 2008:7, Research Papers in Economics from Stockholm University, Department of Economics
Canzoneri and Diba (2004) show that the Taylor principle is not a panacea for equilibrium determinacy in a model where bonds and money provide liquidity services to households. We consider a cashless variant of their model with two types of government bonds. One bond provides transaction services, whereas the other is used only as a store of value. We show that the Taylor principle is still sacrosant. In general, the results of Leeper (1991) are confirmed.
Keywords: Monetary Policy; Fiscal Policy; Government Bonds; Determinacy (search for similar items in EconPapers)
JEL-codes: C68 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Working Paper: Determinacy of interest rate rules with bond transaction services in a cashless economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2008_0007
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