Asset prices and monetary policy in a sticky-price economy with financial frictions
MPRA Paper from University Library of Munich, Germany
A recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arises if the working capital of firms is subject to their asset values by financial frictions.
Keywords: asset prices; financial frictions; equilibrium indeterminacy; monetary policy; sticky prices (search for similar items in EconPapers)
JEL-codes: E32 E52 E44 C62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Working Paper: Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24113
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