Revista Brasileira de Economia
On-line version ISSN 1806-9134
CUNHA, Alexandre B.. Managing public debt, money supply and foreign assets: some indeterminacy results. Rev. Bras. Econ. [online]. 2005, vol.59, n.3, pp. 427-444. ISSN 1806-9134. http://dx.doi.org/10.1590/S0034-71402005000300004.
We provide in this paper three indeterminacy results concerning competitive equilibrium in an open economy monetary model. First, we show that if Friedman's prescription of zero nominal interest rate is implemented, then the path of the nominal balances is not uniquely determined. Second, we show that the maturity of the public debt is undetermined in a competitive equilibrium. Finally, we show that any competitive equilibrium allocation and prices can be decentralized by distinct exchange-rate regimes.
Keywords : indeterminacy; monetary policy; exchange-rate regime.