I wish to thank two anonymous referees for their useful comments on an earlier version. Of course, all remaining deficiencies are mine.
Liquidity Effects in Non-Ricardian Economies
Article first published online: 8 MAY 2006
The Scandinavian Journal of Economics
Volume 108, Issue 1, pages 65–80, March 2006
How to Cite
Bénassy, J.-P. (2006), Liquidity Effects in Non-Ricardian Economies. The Scandinavian Journal of Economics, 108: 65–80. doi: 10.1111/j.1467-9442.2006.00440.x
- Issue published online: 8 MAY 2006
- Article first published online: 8 MAY 2006
- First version submitted February 2004; final version received March 2005.
- Liquidity effect;
- non-Ricardian economies
It has often been found difficult to generate a liquidity effect (i.e., a negative effect of monetary injections on the nominal interest rate) in the traditional “Ricardian” stochastic dynamic model with a single infinitely lived household. We show that moving to a non-Ricardian environment where new agents enter the economy in each period allows such a liquidity effect to be generated.