Posted: March 10th, 2016
To the extent that money growth is positively serially correlated (assume ρm = 0.5), the nominal rate will necessarily increase in response to a monetary expansion. Under what conditions the liquidity eﬀect, which would imply negative relationship between nominal interest rate and quantity of money in the economy, can be restored?
Place an order in 3 easy steps. Takes less than 5 mins.