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INTEREST RATE PEGS, WEALTH EFFECTS AND PRICE LEVEL DETERMINACY
Author(s) -
Annicchiarico Barbara,
Marini Giancarlo
Publication year - 2006
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2006.00254.x
Subject(s) - determinacy , economics , indeterminacy (philosophy) , interest rate , mathematical economics , econometrics , keynesian economics , monetary economics , microeconomics , mathematics , philosophy , mathematical analysis , epistemology
This paper analyses the issue of price level determinacy in an optimizing general equilibrium model with overlapping generations. It is shown that under a pure interest rate peg wealth effects rule out nominal indeterminacy but give rise to multiple equilibria.