Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions
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 arise if the working capital of firms is subject to their asset values by financial frictions.
Year of publication: |
2010-12
|
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Authors: | Kengo, NUTAHARA |
Institutions: | Research Institute of Economy, Trade and Industry (RIETI) |
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