Monetary policy and macroeconomic equilibrium in an oligopolistic economy

This paper examines the impact of monetary policies in an oligopolistic economy. The product market is modeled as an infinitely repeated supergame in which firms collude by restricting output levels. It is demonstrated that contractionary monetary policies, through their impact on interest rates, te...

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Bibliographic Details
Published inJournal of macroeconomics Vol. 17; no. 4; pp. 651 - 665
Main Authors Damania, D., Masden, Jakob B.
Format Journal Article
LanguageEnglish
Published Detroit Elsevier Inc 01.10.1995
Elsevier
Wayne State University Press
Elsevier Science Ltd
SeriesJournal of Macroeconomics
Subjects
Economic impact
Economic models
Equilibrium
Game theory
Interest rates
Macroeconomics
Monetary policy
Oligopoly
Studies
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Summary:This paper examines the impact of monetary policies in an oligopolistic economy. The product market is modeled as an infinitely repeated supergame in which firms collude by restricting output levels. It is demonstrated that contractionary monetary policies, through their impact on interest rates, tend to raise collusive output levels. This is labeled the “strategic effect” of interest rates. The paper presents empirical evidence to test the predictions of the model.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0164-0704
1873-152X
DOI:10.1016/0164-0704(95)80087-5