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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

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