Abstract
The specialisation of an economic model, created for open economies by Dornbusch in 1976, implies that a sudden expansion of the money supply makes the time path exponentially approach the higher steady-state level. This model was modified several times, but all modifications imply the typically exponential approach that does not fit empiric data. So we study models containing a time delay of the rate of inflation and get results which are more realistic.
This is a preview of subscription content, log in via an institution to check access.
Preview
Unable to display preview. Download preview PDF.
References
DORNBUSCH, R. (1976), “Expectations and Exchange Rate Dynamics”, Journal of Pol Economics, 84, 1161–1176.
DORNBUSCH, R. and FISCHER, S. (1992), Makroökonomik, Oldenbourg Verlag München.
FISHER, W.H. and TURNOVSKI, S.J. (1992), “Fiscal Policy and the Term Structure of Interest Rates: A Intertemporal Optimizing Analysis”, Journal of Money, Credit, and Banking, 24, 1–26.
HILB, E. (1918), “Zur Theorie der linearen funktionalen Differentialgleichungen”, Mathematische Annalen, 78, 137–170.
Krtscha, M. (1992), “Short-Term and Long-Term Interest Rates in a Monetary Model of a Closed Economy”, Operations Research’91, Physica-Verlag, Heidelberg.
SCHRÖDER, J. and v. KALCKREUTH, U. (1992), “Duration of Capital Commitment, Term Structure of Interest Rates and the Impact of Monetary Policy in Open Economies”, Institut für Volkswirtschaftslehre und Statistik der Universität Mannheim, Discussion Paper, Nr. 463–92.
TURNOVSKI, S.J. (1986), “Short-Term and Long-Term Interest Rates in a Monetary Model of a Small Open Economy”, Journal of International Economics, 20, 291–311.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1993 Springer-Verlag Berlin · Heidelberg
About this chapter
Cite this chapter
Krtscha, M. (1993). The Dependence of the Price Level on the Expansion of the Money Supply in Closed Economies. In: Diewert, W.E., Spremann, K., Stehling, F. (eds) Mathematical Modelling in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78508-5_24
Download citation
DOI: https://doi.org/10.1007/978-3-642-78508-5_24
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-78510-8
Online ISBN: 978-3-642-78508-5
eBook Packages: Springer Book Archive