Acta Oeconomica Pragensia 2005, 13(1):26-35 | DOI: 10.18267/j.aop.125

A Small-Open-Economy Model and Endogenous Money Stock

Jan Kodera, Miloslav Vošvrda, Karel Sladký

The purpose of this paper is to study a three-equation dynamic model. The first equation describes the commodity market. The second one demonstrates the dynamics of the money market and the third equation is the interest rate parity. The aim is to investigate the conditions of more complex behaviour of the model. The more complex dynamic behaviour, i.e., limit cycles, could appear when nonlinear investment function is used in the model, for example. Furthermore the nonlinear function of money supply depending on interest rate is used in the model.

Keywords: exchange rate dynamics, limit cycle, money market dynamics, non-linear dynamic model, uncovered interest rate
JEL classification: E44

Published: March 1, 2005  Show citation

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Kodera, J., Vošvrda, M., & Sladký, K. (2005). A Small-Open-Economy Model and Endogenous Money Stock. Acta Oeconomica Pragensia, 13(1), 26-35. doi: 10.18267/j.aop.125
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