All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

Patrick Fève, Fabrice Collard and Stéphane Auray
''Habit Persistence and Beliefs Based Liquidity Effect''
( 2002, Vol. 5 No.2 )
The paper introduces habit persistence in consumption decisions in an infinitely-lived agents monetary model with a cash-in-advance constraint. We show that strong enough habit persistence yields indeterminate equilibria. However, real indeterminacy is not per se sufficient to obtain a liquidity effect. The form of the beliefs matters.
JEL: E4 - Money and Interest Rates: General
E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Manuscript Received : Mar 21 2002 Manuscript Accepted : Mar 29 2002

  This abstract has been downloaded 2309 times                The Full PDF of this paper has been downloaded 151996 times