publication . Article . 2000

Money, banks and endogenous volatility

Pere Gomis-Porqueras;
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  • Published: 01 Apr 2000 Journal: Economic Theory, volume 15, pages 735-745 (issn: 0938-2259, eissn: 1432-0479, Copyright policy)
  • Publisher: Springer Science and Business Media LLC
Abstract
In this paper I consider a monetary growth model in which banks provide liquidity, and the government fixes a constant rate of money creation. There are two underlying assets in the economy, money and capital. Money is dominated in rate of return. In contrast to other papers with a larger set of government liabilities, I find a unique equilibrium when agents' risk aversion is moderate. However, indeterminacies and endogenous volatility can be observed when agents are relatively risk averse.
Subjects
free text keywords: Spatial separation, Endogenous volatility, Incomplete insurance., Economics and Econometrics, Rate of return, Government, Market liquidity, Growth model, Financial economics, Money creation, Microeconomics, Risk aversion, Economics, Volatility (finance), jel:E44, jel:E52
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publication . Article . 2000

Money, banks and endogenous volatility

Pere Gomis-Porqueras;