Barbara Annicchiarico & Giancarlo Marini :
026_DP42 Interest Rate Peg, Wealth Effects & Price Level Determinacy
JEL Classification:
E31, E63.
Abstract:
This paper analyses the issues of price level determinacy in an optimising general equilibrium model with overlapping generations. It is shown that under a pure interest rate peg, wealth effects rule out nominal indeterminacy but give rise to solution multiplicity.
