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SSRN Electronic Journal
Article . 2005 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2005
Data sources: EconStor
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On the Relevance of Monetary Aggregates in Monetary Policy Models

Authors: Feldkord, Eva-Ulrike;

On the Relevance of Monetary Aggregates in Monetary Policy Models

Abstract

This paper develops a business cycle model with a financial intermediation sector. Financial wealth is defined as a predetermined state variable. Both, the additional sector of financial intermediaries and predetermination of financial wealth, affect the demand for real financial wealth. If real financial wealth also enters the monetary policy rule, the conditions for stability and uniqueness of the macroeconomic equilibrium path change fundamentally compared to standard New Keynesian business cycle models. Here, real financial wealth is interpreted as a real broad monetary aggregate. Furthermore, different interest rate rules and their consequences for stability and uniqueness of the macroeconomic equilibrium path are considered. Two monetary policy rules are found to be feasible - i.e. if these monetary policy rules are applied there exists a stable and unique macroeconomic equilibrium path. Simulations of the model showed that the monetary policy rule considering inflation and broad money as indicators is optimal.

Keywords

Geldvermögen, Geldpolitik, ddc:330, Gleichgewichtsstabilität, monetary policy, broad money, Finanzintermediär, broad money,macroeconomic stability,monetary policy, macroeconomic stability, Konjunkturtheorie, Geldpolitisches Ziel, E51, E52, E41, Ungleichgewichtstheorie, Theorie, jel: jel:E51, jel: jel:E52, jel: jel:E41

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
bronze