Meng, Qinglai; Yip, Chong - In: Economic Theory 23 (2004) 4, pp. 863-878
By adding endogenous investment to a flexible-price, money-in-the-utility-function model, this paper studies the role that physical capital plays in stabilizing the real side of the economy when the monetary authority follows interest-rate feedback rules. We show that with inelastic labor supply...