Open Access BASE2002
Monetary equilibria with monopolistic competition and sticky prices
Abstract
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.
Themen
Sprachen
Englisch
Verlag
Providence, RI: Brown University, Department of Economics
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