Macroeconomic Stability in a Model with Bond Transaction Services
AbstractCochrane (2014) shows that high-powered money balances and short-term government bonds can be considered as perfect substitutes for the U.S economy during the past twenty years. We build on this claim and consider a variant of the standard cashless new-Keynesian model with two types of government bonds, which can be thought of as short- and long-term bonds. The first one has a macroeconomic role in the sense that it provides transaction services in addition to generating a yield. The other type of government bond pays only an interest rate. Consistent with previous findings, the Taylor principle is not a panacea for equilibrium determinacy in a model without money. When the government bond market matters beyond the need for fiscal solvency, monetary policy rules do not need to comply with the Taylor principle for unique equilibria to exist. View Full-Text
Scifeed alert for new publicationsNever miss any articles matching your research from any publisher
- Get alerts for new papers matching your research
- Find out the new papers from selected authors
- Updated daily for 49'000+ journals and 6000+ publishers
- Define your Scifeed now
Marzo, M.; Zagaglia, P. Macroeconomic Stability in a Model with Bond Transaction Services. Int. J. Financial Stud. 2018, 6, 23.
Marzo M, Zagaglia P. Macroeconomic Stability in a Model with Bond Transaction Services. International Journal of Financial Studies. 2018; 6(1):23.Chicago/Turabian Style
Marzo, Massimiliano; Zagaglia, Paolo. 2018. "Macroeconomic Stability in a Model with Bond Transaction Services." Int. J. Financial Stud. 6, no. 1: 23.
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.