Document Type

Article

Publication Date

3-1975

Number

005

Abstract

Mundell obtains this result by postulating stable flow demands for assets, whereas — as is argued here -- saving and investment arise from an inequality between actual and desired asset stocks. The model developed in this paper will include both the stock and flow demands for assets and demonstrates that inflation will permanently alter the real interest rate only if it can change the desired stock of capital.

Published As

This paper was published in Southern Economic Journal Vol. 42, No. 4 (Apr., 1976), pp. 716-719

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