Interest Rate Pegs, Wealth Effects and Price Level Determinacy
Marini GiancarloAnnicchiarico Barbara
CEIS Research Paper
This paper analyses the issue of price level determinacy in an optimising general equilibrium model with overlapping generations. It is shown that under a pure interest rate peg, wealth effects rule out nominal indeterminacy but give rise to multiple equilibria.
Number: 65
Keywords: Price Level Determination, Interest Rate Pegging, Multiple Equilibria
JEL codes: E31, E63
Date: Friday, February 4, 2005
Revision Date: Friday, February 4, 2005