Abstract:Summary: 1. Introduction; 2. The economy; 3. Extension to optimal policies; 4. Conclusion.Keywords: indeterminacy; monetary policy; exchange-rate regime.JEL Codes: E52; E58; F31; H63.We provide in this paper three indeterminacy results concerning competitive equilibrium in an open economy monetary model. First, we show that if Friedman's prescription of zero nominal interest rate is implemented, then the path of the nominal balances is not uniquely determined. Second, we show that the maturity of the public de… Show more
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