Munich Personal RePEc Archive

Asset prices and monetary policy in a sticky-price economy with financial frictions

Nutahara, Kengo (2010): Asset prices and monetary policy in a sticky-price economy with financial frictions.

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Abstract

A recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arises if the working capital of firms is subject to their asset values by financial frictions.

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