Indeterminacy of equilibrium allocations in monetary open economies

Matteo Salto

No 1998062, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In an open economy, outside money in positive supply does not eliminate the real indeterminacy which arises under uncertainty and incomplete asset markets. If money supply is subject to shocks or is not perfectly credible in all countries, the level of a fixed exchange rate matters. Analogous results obtain in cash-in-advance models.

Keywords: Incomplete markets; exchange rates; monetary economy. (search for similar items in EconPapers)
JEL-codes: D52 E50 F41 (search for similar items in EconPapers)
Date: 1998-11-01
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