INDETERMINACY IN CASH-IN-ADVANCE MODELS AND THE ROLE OF FRICTIONS
Küçük Resim Yok
Tarih
2010
Yazarlar
Dergi Başlığı
Dergi ISSN
Cilt Başlığı
Yayıncı
Cambridge Univ Press
Erişim Hakkı
info:eu-repo/semantics/closedAccess
Özet
A monetary cash-in-advance model is known to be prone to real indeterminacy if the intertemporal elasticity of substitution in consumption is sufficiently low. Moreover, if the model features habit formation in consumption, the scope of indeterminacy increases substantially. This paper shows that many of the nominal frictions and real rigidities commonly used in the New Keynesian paradigm act to decrease the scope of this indeterminacy. These frictions include stickiness in prices and wages, adjustment costs in investment, and variable capacity utilization. When they are all used together in the model, the problem of indeterminacy nearly vanishes, even when habit formation in consumption is allowed.
Açıklama
Anahtar Kelimeler
Indeterminacy, Sunspots, Habit Formation, Cash İn Advance, Monetary-Policy, Sticky Prices, Business-Cycle, Money, Persistence, Consumption, Rigidities, Output, Costs, Habit
Kaynak
Macroeconomic Dynamics
WoS Q Değeri
Q2
Scopus Q Değeri
Q2
Cilt
14
Sayı
1
