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An argument for positive nominal interest
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Bloise, Gaetano and Polemarchakis, H. M. (2015) An argument for positive nominal interest. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1104).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
In a dynamic economy, money provides liquidity as a medium of exchange.
A central bank that sets the nominal rate of interest and distributes its profit to shareholders as dividends is traded in the asset market. A nominal rates of interest that tend to zero, but do not vanish, eliminate equilibrium allocations that do not converge to a Pareto optimal allocation.
Key words: nominal rate of interest; dynamic efficiency.
JEL classification numbers: D-60; E-10.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HG Finance | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Interest, Liquidity (Economics) | ||||
Series Name: | Warwick economics research papers series (WERPS) | ||||
Publisher: | University of Warwick. Department of Economics | ||||
Place of Publication: | Coventry | ||||
ISSN: | 0083-7350 | ||||
Official Date: | 1 December 2015 | ||||
Dates: |
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Number: | 1104 | ||||
Number of Pages: | 23 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Description: | Also appears as CRETA Discussion Paper No. 14 |
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