Open AccessPosted Content
A Unified Framework for Monetary Theory and Policy Analysis
898
TL;DR: This article proposed a framework based on explicit micro foundations within which macro policy can be analyzed and demonstrated that the model is both analytically tractable and amenable to quantitative analysis by using it to estimate the welfare cost of inflation.
read more
Abstract: Search-theoretic models of monetary exchange are based on explicit descriptions of the frictions that make money essential. However, tractable versions of these models typically need strong assumptions that make them ill-suited for studying monetary policy. We propose a framework based on explicit micro foundations within which macro policy can be analyzed. The model is both analytically tractable and amenable to quantitative analysis. We demonstrate this by using it to estimate the welfare cost of inflation. We find much higher costs than the previous literature: our model predicts that going from 10% to 0% inflation can be worth between 3% and 5% of consumption.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
Endogenous search, price dispersion, and welfare
TL;DR: In this article, the welfare cost of inflation in a frictional monetary economy with endogenous consumer search was studied and the aggregate effect of these three channels on welfare was non-monotonic.
19
Imperfect recognizability and coexistence of money and higher-return assets
TL;DR: In this paper, a general distribution of positive counterfeiting costs within a signaling-game framework is invoked, and if the cost of counterfeiting is small, then any monetary equilibrium that satisfies the intuitive criterion necessarily exhibits coexistence.
19
A new monetarist model of fiat and e‐money
TL;DR: In this article, a dual payment New Monetarist model was developed, where an electronic money (e-purse) competes with fiat money (cash), and the two payment instruments differ in terms of security, cost and acceptability.
19
The Market For Bitcoin Transactions
Kwok Ping Tsang,Zichao Yang +1 more
TL;DR: A model where users and miners together determine transaction fees and transaction volume is built, and a back-of-envelope calculation shows that the cost of using the bitcoin network for transactions is still smaller than the costof using the current conventional payment system with a fixed transaction fee rate.
19
A model in which monetary policy is about money
Alexei Deviatov,Neil Wallace +1 more
TL;DR: In this article, optimal monetary policy is studied in a model with heterogeneity in the degree to which different people are monitored (have publicly known histories); idiosyncratic shocks that give rise to heterogeneity in earning and spending realizations; and central-bank intervention in a "market" in claims or credit in which the participants are those who are heavily monitored.
18
References
•Book
Recursive methods in economic dynamics
Nancy L. Stokey,Robert E. Lucas,Edward C. Prescott +2 more
- 01 Jan 1989
TL;DR: In this article, a deterministic model of optimal growth is proposed, and a stochastic model is proposed for optimal growth with linear utility and linear systems and linear approximations.
3.4K
Indivisible labor and the business cycle
TL;DR: In this paper, a growth model with shocks to technology is studied, and it is shown that, unlike previous equilibrium models of the business cycle, this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity.
2.6K
Optimal fiscal and monetary policy in an economy without capital
Robert E. Lucas,Nancy L. Stokey +1 more
TL;DR: In this paper, the structure and time-consistency of optimal fiscal and monetary policy in an economy without capital are investigated. And the main finding is that with debt commitments of sufficiently rich maturity structure, an optimal policy, if one exists, is time-Consistent.
2.2K
•Book
Monetary Theory and Policy
Carl E. Walsh
- 27 Oct 1998
TL;DR: In this article, empirical evidence on money and output is presented, including the Tobin effect and the MIU approximation problems, and a general equilibrium framework for monetary analysis is presented.
2.1K
On The Efficiency of Matching and Related Models of Search and Unemployment
TL;DR: In this article, a simple framework for evaluating the allocative performance of economies characterized by trading frictions and unemployment is described, which integrates the normative results of earlier diamond-Mortensen-Pissarides bilateral matching-bargaining models of trade coordination and price-setting.
1.9K