scholarly journals Real Indeterminacy of Stationary Monetary Equilibria in Centralized Economies

2017 ◽  
Author(s):  
Kazuya Kamiya ◽  
So Kubota ◽  
Kayuna Nakajima
Keyword(s):  
Real Indeterminacy

scholarly journals ON SUNSPOTS, HABITS, AND MONETARY FACTS

2007 ◽  
Vol 12 (1) ◽  
pp. 72-96 ◽  
Author(s):  
STÉPHANE AURAY ◽  
PATRICK FÈVE
Keyword(s):  
Transmission Mechanism ◽  
Monetary Transmission ◽  
Habit Persistence ◽  
Monetary Transmission Mechanism ◽  
Consumption Decisions ◽  
Price Puzzle ◽  
Short Run ◽  
Real Indeterminacy ◽  
Persistent Response ◽  
The U.S

This paper proposes a sunspot-based mechanism that quantitatively accounts for the main monetary facts. In particular, we propose a cash-in-advance model with habit persistence and local durability in consumption decisions. In this context, when habit persistence is strong enough, there is real indeterminacy. We show that when sunspots positively correlate with money injections, the model generates a persistent response of inflation, a hump-shaped response of output, and the price puzzle. We then apply the model to the U.S data and we show that it performs well in reproducing the monetary transmission mechanism and the price puzzle in the short run.

Real Indeterminacy in a Cash-In-Advance Economy

2002 ◽  
pp. 163-178
Author(s):  
Stéphane Auray ◽  
Fabrice Collard ◽  
Patrick Fève
Keyword(s):  
Real Indeterminacy ◽  
Cash In Advance

Real indeterminacy of equilibria and manipulability

2002 ◽  
Vol 37 (4) ◽  
pp. 325-340 ◽  
Author(s):  
Marta Faias ◽  
Emma Moreno-Garcı́a ◽  
Mário Rui Páscoa
Keyword(s):  
Real Indeterminacy

INDETERMINACY IN CASH-IN-ADVANCE MODELS AND THE ROLE OF FRICTIONS

2009 ◽  
Vol 14 (1) ◽  
pp. 119-135 ◽  
Author(s):  
Koray Akay
Keyword(s):  
Habit Formation ◽  
Capacity Utilization ◽  
Adjustment Costs ◽  
New Keynesian ◽  
Elasticity Of Substitution ◽  
Variable Capacity ◽  
Model Features ◽  
Real Indeterminacy ◽  
Cash In Advance

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.

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