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Kazuo Mino and Jun-ichi Itaya
''Interest-rate rule and multiple equilibria with endogenous growth''
( 2004, Vol. 5 No.6 )
This paper examines the role of interest-rate feedback rule in a monetary endogenous growth model in which money is introduced via a cash-in-advance constraint and long-run growth is sustained by external increasing returns. It is shown that dynamic properties as well as the balanced-growth characterization are highly sensitive not only to the degree of increasing returns but also to the interest-rate feedback rule adopted by the monetary authority. In particular, the conditions for indeterminacy of equilibrium depends heavily upon whether the interest-rate rule is active or passive.
Keywords: endogenous growth
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
O4 - Economic Growth and Aggregate Productivity: General
Manuscript Received : Feb 26 2004 Manuscript Accepted : Feb 26 2004

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