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| Kazuo Mino and Jun-ichi Itaya |
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| ''Interest-rate rule and multiple equilibria with endogenous growth'' |
| ( 2004, Vol. 5 No.6 ) |
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| 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. |
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| Keywords: endogenous growth |
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
O4 - Economic Growth and Aggregate Productivity: General |
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| Manuscript Received : Feb 26 2004 | | Manuscript Accepted : Feb 26 2004 |
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