https://www.alexanderkriwoluzky.com/tags/determinacy/ Recent content in Determinacy on Alexander Kriwoluzky Hugo en Tue, 01 Sep 2015 00:00:00 +0000 https://www.alexanderkriwoluzky.com/publications/mar/mar/ Tue, 01 Sep 2015 00:00:00 +0000 https://www.alexanderkriwoluzky.com/publications/mar/mar/ <h5 id="abstract">Abstract <a href="#abstract"></a> </h5> <p>The declining importance of money in transactions can explain the well-known fact that US interest rate policy was passive in the pre-Volcker period and active after 1982. We generalise a standard cashless New Keynesian model (Woodford, 2003) by incorporating an explicit transaction role for money. In the pre-Volcker period, we estimate that money did play an important role and determinacy required a passive interest rate policy. However, after 1982, money no longer played an important role in facilitating transactions. Correspondingly, the conventional view prevails and an active policy ensured equilibrium determinacy.</p>