A Study on the Dynamics of Interest Rate

LI, Wu (2012): A Study on the Dynamics of Interest Rate.

Abstract

By integrating the fiat money into the structural growth model in [1], this paper presents a dynamic model for the simulation study of interest rate. And the model is illustrated with a numerical example. The equilibria of the numerical example are also computed by the method in [2]. The monetary policies of controlling the interest rate and controlling the money supply are simulated.

• Item Type: MPRA Paper
• Language: English
• Keywords: interest rate; money supply; general equilibrium; price
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models

References

[1] Li W., A Structural Growth Model and its Applications to Sraffa’s System. Presented at the 18th International Input-Output Conference, Sydney, downloadable at http://www.iioa.org/Conference/18th-downable%20paper.htm, 2010.

[2] Li W., A Study on Dynamic General Equilibrium under the Classical Growth Framework. MPRA working paper 25882, 2010.

[3] K. Wicksell, Interest and Prices: A Study of the Causes Regulating the Value of Money (1898). Translated by R.F. Kahn, MacMillan: London, 1936.

[4] M. Woodford, Interest and Prices: Foundations of a Theory of Monetary Policy. Princeton University Press, 2003.

[5] P. S. Rose and M. H. Marquis, Money and Capital Markets (10th Edition). McGraw-Hill, 2008.