The Real Value of Money under Endogenous Beliefs

Graziella Bertocchi; Yong Wang

doi:10.1006/jeth.1995.1071

The Real Value of Money under Endogenous Beliefs

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

Overview

4 Scopus Citations

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Author(s)

Graziella Bertocchi
Yong Wang

Detail(s)

Original language	English
Pages (from-to)	205-222
Journal / Publication	Journal of Economic Theory
Volume	67
Issue number	1
Publication status	Published - Oct 1995
Externally published	Yes

Link(s)

DOI	DOI https://doi.org/10.1006/jeth.1995.1071 Final Published version
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Link to Scopus	https://www.scopus.com/record/display.uri?eid=2-s2.0-0043106896&origin=recordpage
Permanent Link	https://scholars.cityu.edu.hk/en/publications/publication(beff41ff-f2f2-4ebe-82d4-bbf0a9be51d4).html

Abstract

We study an overlapping generations model where the level of confidence in money evolves endogenously as a function of aggregate real money balances. The economy can display multiple stationary equilibria where the aggregate bubble on money is stochastic and the level of confidence is partial. Steady states can be ranked by the degree of confidence, with more inefficiency being associated with less confidence. It is only under certain restrictions that the Golden Rule constitutes a steady state for the system. Autarky becomes unstable and complex dynamics such as cycles and chaos can emerge even under gross substitutability. Journal of Economic Literature Classification Numbers: D50, E10, E40. © 1995 Academic Press. All rights reserved.