Please use this identifier to cite or link to this item: https://hdl.handle.net/2440/57633
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Type: Journal article
Title: Habit persistence, money growth rule and real indeterminancy
Author: Auray, S.
Collard, F.
Feve, P.
Citation: Review of Economic Dynamics, 2005; 8(1):48-67
Publisher: Academic Press
Issue Date: 2005
ISSN: 1094-2025
Statement of
Responsibility: 
Stéphane Auray, Fabrice Collard and Patrick Fève
Abstract: This paper studies the dynamic properties of a standard cash-in-advance model modified to include habit persistence over preferences. The central bank is assumed to follow an exogenous money growth rule. We show that equilibrium real indeterminacy is more likely to occur when habit persistence is high enough. We then establish that, in contrast to the standard CIA model, the implied sunspot dynamics may be non-oscillatory. This result is robust against alternative specifications provided the rigid CIA assumption is maintained.
Keywords: Habit persistence
Cash-in-advance
Exogenous money growth rule
Real indeterminacy
DOI: 10.1016/j.red.2004.10.007
Published version: http://dx.doi.org/10.1016/j.red.2004.10.007
Appears in Collections:Aurora harvest
Economics publications

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