|
| |
| Seiya Fujisaki |
| |
| ''Economic Stability and Interest-Rate Controls in an Open-Economy Model with Productive Money'' |
| ( 2012, Vol. 32 No.4 ) |
| |
| |
| We analyze the relation between interest-rate controls and equilibrium determinacy in a two-country model in which money is employed as a factor of production. Given this specification, holding cash generates an opportunity cost. Therefore, equilibrium can be indeterminate even if both countries demonstrate additive-separable utilities between consumption and non-productive money. |
| |
| |
| Keywords: Taylor rule, productive money, equilibrium determinacy, open economy. |
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
F4 - Macroeconomic Aspects of International Trade and Finance: General |
| |
| Manuscript Received : Jun 10 2012 | | Manuscript Accepted : Nov 06 2012 |
|
