Liquidity effects in non Ricardian economies

Pre-print, Working paper: It has often been found difficult to generate a liquidity effect (i.e. a negative effect of monetary injections on the nominal interest rate) in the traditional "Ricardian" stochastic dynamic model with a single infinitely lived household. We show that moving to a non Ricardian environment where new agents enter the economy in each period allows to generate such a liquidity effect.

Author(s)

Jean-Pascal Bénassy

Date of publication
  • 2005
Keywords JEL
E43 E52
Keywords
  • Liquidity effect
  • Non Ricardian economies
Internal reference
  • PSE Working Papers n°2005-47
Version
  • 1