Working Paper: CEPR ID: DP4948
Authors: Bernardino Ado; Isabel Horta Correia; Pedro Teles
Abstract: We consider standard cash-in-advance monetary models and show that there are interest rate or money supply rules such that equilibria are unique. The existence of these single instrument rules depends on whether the economy has an infinite horizon or an arbitrarily large but finite horizon.
Keywords: interest rate rules; monetary policy; unique equilibrium
JEL Codes: E31; E40; E52; E58; E62; E63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interest rate feedback rules (E43) | unique equilibrium (C62) |
| money supply feedback rules (E51) | unique equilibrium (C62) |
| single instrument policies (G52) | multiple equilibria (D50) |
| structure of the economy (L16) | effectiveness of monetary policy (E52) |