Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76112
Authors: 
Evans, George W.
Honkapohja, Seppo
Marimon, Ramon
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 611
Abstract: 
We develop a monetary model with flexible supply of labor, cash in advance constraints and government spending financed by seignorage. This model has two regimes. One regime is conventional with two steady states. The other regime has a unique steady state which can be determinate or indeterminate. In the latter case there exist sunspot equilibria which are stable under adaptive learning, taking the form of noisy finite state Markov processes at resonant frequencies. For a range of parameter values, a sufficient reduction in government purchases will eliminate these equilibria.
Subjects: 
indeterminacy
learnability
expectational stability
endogenous fluctuations
seignorage
Document Type: 
Working Paper

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