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Walras' Law in stochastic macro models. The example of the optimal monetary instrument.

Klausinger, Hansjörg (2002) Walras' Law in stochastic macro models. The example of the optimal monetary instrument. Department of Economics Working Paper Series, 82. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.

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Abstract

This note demonstrates that the shocks explicitly modeled as well as those implicitly present in stochastic macro-models must obey a restriction derived from Walras' law. In the standard case of statistical independence of real and monetary shocks there must be a financial shock to bond demand that mirrors those shocks, bond holdings thus acting in fact as buffer stocks. As an example the choice of the optimal monetary instrument is examined for the converse case of buffer-stock money and compared with the standard case.

Item Type: Paper
Additional Information: erschienen in: Jahrbuch für Wirtschaftswissenschaften 53 (2002), S. 341-45
Keywords: Walras' Law / optimal monetary instrument / buffer-stock money
Classification Codes: JEL E52
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 13 Nov 2002 11:58
Last Modified: 08 Jun 2011 13:29
URI: http://epub.wu.ac.at/id/eprint/914

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