Liquidity Effects in Non‐Ricardian Economies |
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Authors: | Jean Pascal Bé nassy |
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Affiliation: | CEPREMAP‐ENS, F‐75014 Paris, France |
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Abstract: | It has often been found difficult to generate a liquidity effect (i.e., a negative effect of monetary injections on the nominal interest rate) in the traditional “Ricardian” stochastic dynamic model with a single infinitely lived household. We show that moving to a non‐Ricardian environment where new agents enter the economy in each period allows such a liquidity effect to be generated. |
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Keywords: | Liquidity effect non‐Ricardian economies |
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