TY - JOUR
T1 - The variability of velocity of money in a search model
AU - Wang, Weimin
AU - Shi, Shouyong
N1 - Funding Information:
We are very grateful to Chunling Liu for assisting us on collecting and analyzing the data. We thank an associate editor and a referee for very useful and detailed comments. We have also benefited from the comments by and discussions with Michelle Alexopoulos, Dean Corbae, Andres Erosa, Allen Head, Eric Leeper, Martin Menner, Rob Reed, Xiaodong Zhu, and participants of the Conference on Monetary Theory at Purdue University (2000) and the Meeting of the Society for Economic Dynamics (Costa Rica, 2000). The second author gratefully acknowledges the financial support from the Bank of Canada Fellowship and from the Social Sciences and Humanities Research Council of Canada. The opinions expressed here are the authors’ own and they do not reflect the view of the Bank of Canada or of the Industry Canada.
PY - 2006/4
Y1 - 2006/4
N2 - We construct a dynamic equilibrium model where there is costly search in the goods market and the labor market. Incorporating shocks to money growth and productivity, we calibrate the model to the US time series data to examine the model's quantitative predictions on aggregate variables and, in particular, on the variability of consumption velocity of money. Despite the fact that money is the only asset, the model captures most of the variability of velocity in the data. It also generates realistic predictions on the moments of other variables and provides persistent propagation of the shocks. The model generates these results largely because costly search gives an important role to the extensive margin of trade. Crown
AB - We construct a dynamic equilibrium model where there is costly search in the goods market and the labor market. Incorporating shocks to money growth and productivity, we calibrate the model to the US time series data to examine the model's quantitative predictions on aggregate variables and, in particular, on the variability of consumption velocity of money. Despite the fact that money is the only asset, the model captures most of the variability of velocity in the data. It also generates realistic predictions on the moments of other variables and provides persistent propagation of the shocks. The model generates these results largely because costly search gives an important role to the extensive margin of trade. Crown
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U2 - 10.1016/j.jmoneco.2005.01.005
DO - 10.1016/j.jmoneco.2005.01.005
M3 - Article
AN - SCOPUS:33645954616
SN - 0304-3932
VL - 53
SP - 537
EP - 571
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
IS - 3
ER -