Economic Stability and Interest-Rate Controls in an Open-Economy Model with Productive Money

We analyze the relation between interest-rate controls and equilibrium determinacy in a two-country model in which money is employed as a factor of production. Given this specification, holding cash generates an opportunity cost. Therefore, equilibrium can be indeterminate even if both countries demonstrate additive-separable utilities between consumption and non-productive money.

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Year of publication:	2012
Authors:	Fujisaki, Seiya
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 32.2012, 4, p. 3053-3060
Publisher:	AccessEcon
Subject:	Taylor rule \| productive money \| equilibrium determinacy \| open economy

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Extent:	application/pdf
Type of publication:	Article
Classification:	E5 - Monetary Policy, Central Banking and the Supply of Money and Credit ; F4 - Macroeconomic Aspects of International Trade and Finance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011278868