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The Dependence of the Price Level on the Expansion of the Money Supply in Closed Economies

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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.

Keywords

  • Interest Rate
  • Money Supply
  • Time Path
  • Convergent Series
  • Closed Economy

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© 1993 Springer-Verlag Berlin · Heidelberg

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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

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  • 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

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