| Abstract |
In this paper, we show that dynamic general equilibrium models with fiat money are possible to derive real indeterminacy of stationary equilibria, i.e., the set of stationary equilibria is a continuum, where
the real allocation varies across equilibria. The conditions are: (i) each household optimally saves a constant amount of money, and (ii) at least two households face different budget constraints. We present various models, including decentralized money search model and centralized model with a monopoly firm, to explain how these conditions lead to the real indeterminacy. Finally, we present a new policy that uniquely implements any desirable outcome. |