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Interest-rate rule and multiple equilibria with endogenous growth

Author

Listed:
  • Kazuo Mino

    (Graduate School of Economics, Kobe University)

  • Jun-ichi Itaya

    (Graduate School of Economics)

Abstract

This paper examines the role of interest-rate feedback rule in a monetary endogenous growth model in which money is introduced via a cash-in-advance constraint and long-run growth is sustained by external increasing returns. It is shown that dynamic properties as well as the balanced-growth characterization are highly sensitive not only to the degree of increasing returns but also to the interest-rate feedback rule adopted by the monetary authority. In particular, the conditions for indeterminacy of equilibrium depends heavily upon whether the interest-rate rule is active or passive.

Suggested Citation

  • Kazuo Mino & Jun-ichi Itaya, 2004. "Interest-rate rule and multiple equilibria with endogenous growth," Economics Bulletin, AccessEcon, vol. 5(6), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-04e50001
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    File URL: http://www.accessecon.com/pubs/EB/2004/Volume5/EB-04E50001A.pdf
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    References listed on IDEAS

    as
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    11. repec:bla:econom:v:70:y:2003:i:279:p:451-470 is not listed on IDEAS
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    Cited by:

    1. repec:ebl:ecbull:v:5:y:2007:i:11:p:1-7 is not listed on IDEAS
    2. Chong Kee Yip & Ka Fai Li, 2004. "Monetary Policy and Equilibrium Indeterminacy in a Cash-in-Advance Economy with Investment," Economics Bulletin, AccessEcon, vol. 5(2), pages 1-7.
    3. Chin, Chi-Ting & Guo, Jang-Ting & Lai, Ching-Chong, 2009. "Macroeconomic (in)stability under real interest rate targeting," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1631-1638, September.
    4. Yoshiyasu Ono, 2008. "Determinacy of Equilibrium under Various Phillips Curves," ISER Discussion Paper 0706, Institute of Social and Economic Research, Osaka University.
    5. Itaya, Jun-Ichi & Mino, Kazuo, 2007. "Technology, Preference Structure, And The Growth Effect Of Money Supply," Macroeconomic Dynamics, Cambridge University Press, vol. 11(5), pages 589-612, November.
    6. Kazuo Mino & Seiya Fujisaki, 2007. "Generalized Taylor Rule and Determinacy of Growth Equilibrium," Economics Bulletin, AccessEcon, vol. 5(11), pages 1-7.

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    More about this item

    Keywords

    endogenous growth;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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