|
|
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. |
|
|
Keywords: |
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 |
|