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Chong Kee Yip and Ka Fai Li
''Monetary Policy and Equilibrium Indeterminacy in a Cash-in-Advance Economy with Investment''
( 2004, Vol. 5 No.2 )
In a cash-in-advance economy where cash is required in advance of purchasing both consumption and investment goods, we find that active interest rate rules generate equilibrium uniqueness, but passive rules can lead to real indeterminacy. Simulation shows that even in the presence of investment, passive rules are very likely to render indeterminacy.
Keywords: indeterminacy
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
O4 - Economic Growth and Aggregate Productivity: General
Manuscript Received : Dec 22 2003 Manuscript Accepted : Jan 15 2004

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