DEPOCEN Working Paper Series
Ngoc-Sang PHAM, 2014. "Collateral monetary equilibrium with liquidity constraints in an in_nite horizon economy"
This paper considers an in nite-horizon monetary economy with collateralized assets in which only commodities can be used as collateral. A Central Bank lends money to households by creating short- and long-term loans. Households can deposit or borrow money on both short- and long-term maturity; they face a cash-in-advance constraint when buying commodities of nancial assets. Under various Gains to Trade Hypotheses, the existence of collateral monetary equilibrium is ensured. I also provide some properties of equilibira, including the liquidity trap.
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