A Monetary Model for Analysing Economic Stability

In this paper, we mainly use dynamic methods to consider how the impatience affects the economic stability. And we assume that labor supply is inelastic and the role that physical capital plays in stabilizing the real side of the economy by ensuring uniqueness of equilibrium in alternative environments if the monetary authority follows interest-rate feedback rules. The rate of time preference may be related with the individual consumption, total income, average consumption habit, average capital holdings and so on. Here, our focus on the average social level is to check its effect on the macroeconomic stability.