The discrete Shannon entropy H was formulated only to measure indeterminacy effected through a set of probabilities, but the indeterminacy in a real-valued discrete variable depends on both the allowed outcomes x and the corresponding probabilities p. A fundamental measure that is sensitive to both x and p is derived here from the total differential entropy of a continuous real variable and its...

3 We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable 4 parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is 5 the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerat...

Money provides liquidity services through a cash-in-advance constraint. The exchange of commodities and assets extends over an infinite horizon under uncertainty and a complete asset market. Monetary policy sets the path of rates of interest and accommodates the demand for balances. Competitive equilibria exist. But, for a fixed path of rates of interest, there is a non-trivial multiplicity of ...