Received: 25 October 2003, Revised: 27 April 2004,
JEL Classification Numbers:
D58, E44, G28.
Correspondence to: Dimitrios P. Tsomocos
The authors are grateful to Pamela Nickell for carrying out some of the calculations and Nicola Anderson, Charles Goodhart, Andy Haldane, Glenn Hoggarth, Nobu Kiyotaki, William Klein, Alistair Milne, William Perraudin, Hyun Shin, Paul Tucker, seminar participants at the Bank of England XI European Workshop on General Equilibrium Theory, Federal Reserve Bank of Boston, INSEAD, LSE, the University of Oxford and especially H.M. Polemarchakis for helpful comments and remarks. However, all remaining errors are ours. The views expressed here are those of the authors and do not necessarily reflect those of the Bank of England, and the Bank of Spain.