TY - JOUR
T1 - Search for a Monetary Propagation Mechanism
AU - Shi, Shouyong
N1 - Funding Information:
* I am grateful to Dan Bernhardt, Mick Devereux, and Neil Wallace in particular for comments. The paper has also benefited from comments by workshop participants at Concordia, McMaster, Pittsburgh, Queen’s, Toronto, the Midwest Macroeconomics meetings (Ohio), the Far Eastern Econometric Society meetings (Hong Kong) and the Federal Reserve-University of Miami conference on monetary theory. Financial support from the Social Sciences and Humanities Research Council of Canada is gratefully acknowledged. All remaining errors are mine alone.
PY - 1998/8
Y1 - 1998/8
N2 - This paper examines a monetary propagation mechanism in an economy where exchanges in goods and labor markets involve costly search. It is shown that an increase in the money growth rate increases steady state employment and output when the money growth rate is low but reduces steady state employment and output when the money growth rate is already high. The model produces persistent, hump-shaped responses in employment and output to money growth shocks even when the shocks have no persistence. The model also generates desirable features in job vacancy, sales, inventory, and the velocity of money. All these features emerge here in an economy with perfectly flexible prices and wages.Journal of Economic LiteratureClassification Numbers: E40, E30.
AB - This paper examines a monetary propagation mechanism in an economy where exchanges in goods and labor markets involve costly search. It is shown that an increase in the money growth rate increases steady state employment and output when the money growth rate is low but reduces steady state employment and output when the money growth rate is already high. The model produces persistent, hump-shaped responses in employment and output to money growth shocks even when the shocks have no persistence. The model also generates desirable features in job vacancy, sales, inventory, and the velocity of money. All these features emerge here in an economy with perfectly flexible prices and wages.Journal of Economic LiteratureClassification Numbers: E40, E30.
UR - http://www.scopus.com/inward/record.url?scp=0037687083&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0037687083&partnerID=8YFLogxK
U2 - 10.1006/jeth.1998.2407
DO - 10.1006/jeth.1998.2407
M3 - Article
AN - SCOPUS:0037687083
SN - 0022-0531
VL - 81
SP - 314
EP - 352
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 2
ER -