Monetary Equilibria over an Infinite Horizon

Gaetano Bloise, Jacques Dreze and H. M. Polemarchakis
Additional contact information
H. M. Polemarchakis: Brown University

No 03-19, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: Money provides liquidity services through a cash-in-advance constraint. The exchange of commodities and assets extends over an infinite horizon under uncertainty and a sequentially complete asset market. Monetary policy sets the path of rates of interest and accommodates the demand for balances. A public authority, inheriting a strictly positive public debt, raises revenue from taxes and seignorage. Competitive equilibria exist, under mild solvency conditions. But, for a fixed path of rates of interest, there is a nontrivial multiplicity of equilibrium paths of prices of commodities. Determinacy requires that, subject to no-arbitrage and in addition to rates of interest, the prices of state-contingent revenues be somehow determined.

Keywords: money; equilibrium; indeterminacy; monetary policy; fiscal policy (search for similar items in EconPapers)
JEL-codes: D50 E40 E50 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2003-04
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Related works:
Chapter: Monetary Equilibria over an Infinite Horizon (2006)
Journal Article: Monetary equilibria over an infinite horizon (2005)
Working Paper: Monetary equilibria over an infinite horizon (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0319

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