Monetary equilibria with monopolistic competition and sticky prices

We consider a cash-in-advance economy under uncertainty in which monetary policy sets either short-term nominal interest rates or money supplies. We show that both the initial price level and the distribution of the inflation rate up to its expectation are indeterminate, regardless of the degree of competition or the flexibility of prices in commodity markets. This indeterminacy is not related to the stability of a deterministic steady state.

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Year of publication:	2002
Authors:	Nakajima, Tomoyuki ; Polemarchakis, Herakles
Publisher:	Providence, RI : Brown University, Department of Economics
Subject:	Cash-in-Advance-Modell \| Monopolistischer Wettbewerb \| Preisrigidität \| Geldpolitik \| Theorie \| Gleichgewicht \| sticky prices \| monopolistic competition \| monetary policy \| uncertainty \| indeterminacy.

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Series:	Working Paper ; 2002-25
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	36305782X [GVK] hdl:10419/80213 [Handle]
Classification:	D50 - General Equilibrium and Disequilibrium. General ; E31 - Price Level; Inflation; Deflation ; E40 - Money and Interest Rates. General ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General
Source:	EconStor

Persistent link: https://www.econbiz.de/10010318982