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Ambiguity, Money Transfers, and Endogenous Fluctuations
Department of Economics, Kanagawa University, Kanagawa, Japan
- 1 Department of Economics, Kanagawa University, Kanagawa, Japan
Theoretical Economics Letters·Volume 11 (2021)·Pages 209–225·Published 5 March 2021·DOI10.4236/tel.2021.112015
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Abstract
This article reexamines the implications of stochastic lump-sum money transfers in a monetary overlapping generations model, wherein agents are endowed with maxmin expected utility preferences. It is shown that: 1) there exists a continuum of stationary monetary equilibria, wherein a unique optimal one might exist, and 2) there exist innumerable nonstationary monetary equilibria, wherein the real money balance can move freely within a certain range.
KeywordsLump-Sum Money TransferIndeterminacyEndogenous Business CycleAmbiguityOverlapping Generations Model
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