Sunspot equilibria in a monetary real business cycle model

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Authors

In this paper a modification of the cash-in-advance real business cycle model is introduced in which the possibility of any credit contract is excluded. We show that for some parameter settings the model displays familiar saddle-point stability whereas for other constellations the steady state is a sink. In those cases, sunspot solutions are obtained.
Original languageEnglish
JournalEconomics Letters
Volume53
Issue number3
Pages (from-to)305-310
Number of pages6
ISSN0165-1765
DOIs
Publication statusPublished - 01.12.1996
Externally publishedYes

    Research areas

  • Real business cycles, Sunspots
  • Economics