Indeterminacy and sector-specific externalities

Article Abstract:

The occurrence of indeterminacy is possible for parameter values used in business cycles and for mild external effects that give way for downward- sloping labor demand curves. Empirical models with potentially indeterminate equilibria should be properly used for effectively explaining the propagation mechanism in business cycles. Still, further study is needed for in-depth interpretation of indeterminacy and external effects.

Analysis, Externalities (Economics), Uncertainty

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The demand and liquidity effects of monetary shocks

Article Abstract:

The implications of a monetary shock in a stochastic growth model with a cash-in-advance restriction and a financial intermediary, are investigated. The differences between the effects of constraints on nominal price adjustment and those on savings behavior are examined. Findings indicate that the model which generates the proper response to a temporary monetary shock includes both demand and liquidity effects.

Models, Monetary policy

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