We show that in a canonical one-sector AK model of endogenous growth with a generalized cash-in-advance constraint, the growth and velocity effects of money are closely related to the local stability properties of the economy’s balanced growth paths. When a positive fraction (excluding 100 percent) of gross investment is subject to the liquidity constraint, the economy displays saddle-path stab...

Hong Kong has long been under a fixed exchange rate regime, relying on the currency board to maintain currency stability. Currency board is a rule-based system, but because of the gradual dilution of the rules started in the late 1980s as a result of a number of monetary reforms, the currency board has gradually emphasized more on discretion in setting its policy. Such change in the board’s pol...

This paper looks at whether sticky-price New Keynesian models with microfounded inertia can usefully describe US data. We estimate a range of models, considering specifications with either internal or external consumption habits, specifications containing Taylor-type rules or an optimal discretionary rule, and specifications where inflation is driven by movements in either the gap or real margi...

In this research, non-linear inflationary dynamics based on the concept of missing money is studied using the threshold autoregressive models based on seasonal data of the time interval (1990:04-2016:07) for the economy of Iran. The finding of the research shows that simple and Divisia liquidity growth variables are determined as threshold variables, and inflation reacts to changes in the growt...

the ultimate goal of monetary policy is to achieve price stability and high output. in this regard, central banks usually change the interest rate, liquidity, and money base in order to apply monetary policies. the john b. taylor rule is one of the rules known in the transmission of monetary policy.[1] based on this rule and given the output gap and inflation gap, the central bank increases or ...

Our objective in this paper has been to provide more theoretically coherent microfoundations for monetary policy rules in response to Lucas’s (1976) critique of econometric policy evaluation and, more importantly, to show that the Taylor rule can be derived via Friedman’s k% money supply rule. A key di¤erence with respect to the traditional IS-LM framework, is that, the aggregate decision rules...