Table of contents for Money, interest, and policy : dynamic general equilibrium in a non-Ricardian world / Jean-Pascal Bénassy.


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Part I  Ricardian and Non-Ricardian Economies              I
I The Ricardian Issue and the Pigou Effect                3
1  Inlttroductio n c
t. [he FrdAitionAil Ricrdian Model                       3
L 3. Mon ta ry Pnzz s                                    5
.4 An Overlapping Generations Model                       9
'I he Pigou FITect                                     12
1 6 Conclusions                                           16
-7 References                                            16
Appendix A: Government Spending                           17
Appendit B: Moine in the Utility Function                 18
2 Pigou Reconstructed: The Weil Model                     23
SThe Dy.n incs of the Econo       .                       26
.' 4 [he Pigou Effect                                     28
2 5 Intertemporal Equilibrium and a Dynamnic Equation    30
2.6 A Generalization: Decreasing Resources                  31
27 The Autarkic Interest Rate                               32
2.8 Conclusions                                             34
2.9 References                                              34
Appendix A: Money in the Utilitl Function                   35
Appendix B: Existence Conditions                            38
Appendix C: Proof of Proposition 12                         41
Part 11  Interest, Prices, and Money                        45
3 Liquidity Effects                                        47
3.1 Introduction                                           47
3.2 Liquidity Effects in a Simple IS-LM Model               4/
3.3 The Model and Monetary Policy                          49
3.4 Dynamic Equilibrium                                     50
15 Liquidity Effects                                        51
3.6 A Stronger Liquidity Effect                            53
3.7 The Persistence of the Liquidity Effect                54
3.8 Conclusions                                            56
3.9 References                                             56
Appendix: Proofs of Propositions 3.1 and 3.2                57
4 Interest Rate Rules and Price Determinacy                 63
4.1 Introduction                                            63
4.2 The Model and Policy                                    64
4.3 The Dynamic Equilibrium                                 65
4.4 Ricardian Economies and the Taylor Principle           66
4.5 Determinacy under an Interest Rate Peg                  67
4.6 Taylor Rules                                            68
4.7 Economic Interpretations                                69
4.8 The Taylor Principle with a Phillips Curve              70
4.9 OGeneralizalions                                        73
4.10 Conclusions                                            76
4.11 References                                             76
Appendix: Interest Rate Pegging with Variable Interest Rates  7
5 Global Determinacy .729
5.1 Introduction                                           79
.2 The Model                                               79
SRicardian Economies and the Taylor Principle          82
4 Non-Ricardian Economies: Dynamics and Steady States    84
5  The Financial Dominance Criterion                       86
56: Local Deterimnacy and Financial Dominance             I87
57 Non-Ricardian Dynamics: A Graphical Representation      89
S  obal F'inancial Dominance                             90
, 9 Partial Fin'ancial DOminance                           9
Sl0 Int-erest Rate Rules and Global Determinacy: Examples  96
5. l Conclusions                                           98
512 References                                            99
k.ppendix A: Global Determinacy in Ricardian Economies     99
\ppcndix B: Ilobal Determinacy: Equilibria of Type R      100
\ppendix C: Transversalitv Conditions                     103
6 Fiscal Policy and Determinacy                           107
6. 1 Introduction                                         107
6.2 The Model                                             108
6.. The Dynamic Equations                                 109
6.4 Ricardian Economies and Determinacy                   109
Ai 1..ocai Dletrminacy in the Non-Ricardian Case          1 12
6i Global Determinac                                      115
6. Concdlsions                                            119
6.S References                                            119
Part IHI  Optimal Policy                                  121
7 A Simple Framework for Policy Analysis                  123
71 Introduction                                           123
.2 The Model                                              123
7,3 General Equilibrium Relations                         125
4 OptimalitY                                             127
,. Opt!rial Policies in Walrasian Equilibrium             129
A. Conclusions                                            130
".,  References                                           131
8 Government Information and Policy Activism              133
8.1 Introduction                                          133
8 2 The Sargent-Wallace Argument                          134
8.3 The Model                                             137
8.4 General Equilibrium Relations                             138
8 5 Preset Wages                                              139
8,6 Preset Prices                                             146
8,7 ColiCJusiolnS                                             149
88 References                                                 150
9  Fiscal Policy and Optimal Interest Rate Rules              151
9. 1 ntroduction                                               1 "
9.2 The Model                                                 152
9.3 General Equilibrium Relations                             153
9.4 Optimal nterest Policy : The Wai-asian Case                54
9.5 Preset Wages                                              155
9.6 Preset Prices                                             158
9.7 Conclusions                                               163
9.8 References                                                16
AppenCix: impeeitct Comp)etilon and Deman d Salisfaction     163
10  Inflation and Optimal Interest Rate Rules                1 69
10 1 Introduction                                             169
0.2 The Model                                                170
10.3 Market Equilibrium                                      171
10A4 Preset Prices                                           1 '
10.5 Inflation as a Surrogate for Shocks                     j'75
10.6 Variable Contract Length                                178
10.7 Conclusions                                             182
IO. References                                               182
Appendix: Proofs for Chapter 10                               i,3



Library of Congress subject headings for this publication: Money Mathematical models, Equilibrium (Economics) Mathematical models