In this paper we study the determinacy of price level, nominal and real interest rate and income, in an economy with productive capital and cash-in-advance constraint on consumption purchases. In particular, we show that under mild assumptions on preferences and production sets there may arise a continuum of equilibria converging to the unique stationary solution, which is therefore locally indeterminate, as well as deterministic cycles. Similar results are observed when sustained growth, in view of the presence of aggregate externalities in capital utilization, is accounted for.

JEL Classification: D-90, E-32, E-41
Key words: cash-in-advance, indeterminacy, growth.