The indeterminacy of prices under interest rate pegging: The non-Ricardian case

被引:14
作者
Cushing, MJ [1 ]
机构
[1] Univ Nebraska, Dept Econ, Lincoln, NE 68588 USA
关键词
interest rate pegging; indeterminacy; Ricardian;
D O I
10.1016/S0304-3932(99)00012-4
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
This paper investigates the issue of price level indeterminacy under a pure interest rate peg in models that depart from standard Ricardian assumptions. Using a monetary version of Blanchard's finite horizons model, I find wealth effects operating on government bonds are not sufficient to determine a unique price level. Next, I consider price determination under a non-Ricardian fiscal authority. I show that, if agents rationally perceive the possibility of fiscal default, the price level is again indeterminate. I conclude that departures from Ricardian equivalence are not sufficient to ensure a unique price level under a monetary policy of pure interest rate pegging. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: E42; E31.
引用
收藏
页码:131 / 148
页数:18
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