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| Author: | |
| Title: | Monetary, fiscal, and reserve requirement policy in a simple monetary growth model |
| Journal: | International Economic Review
1997 : MAY, VOL. 38:2, p. 321-350 |
| Index terms: | MONETARY POLICY FISCAL POLICY ECONOMIC GROWTH MODELS |
| Language: | eng |
| Abstract: | This paper examines a simple monetary growth model where spatial esparation and limited communication create a role for money, and stochastic relocation creates a role for banks. This model is used to explore the existence and multiplicity of monetary equilibria with positive nominal interest rates in the presence and absence of government budget deficit, and in the presence and absence of reserve requirements. The paper also examines the consequences for these equilibria of changes in monetary and fiscal policy, as well as changes in reserve requirements. The analysis demonstrates that fiscal and monetary policy changes may have ambiguous and complicated consequences depending on which of the steadystate equilibria obtain. |
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