The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab

Romain Baeriswyl () and Camille Cornand
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Romain Baeriswyl: Swiss National Bank, Boersenstrasse 15, 8022 Zurich, Switzerland

No 1516, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: In an experimental monetary general equilibrium economy, we assess two processes of monetary injection : credit expansion vs. lump-sum monetary transfers. In theory, both processes are neutral and exert no real effect on allocation. In the experiment, however, credit expansion leads to substantial distortions of real allocation and relative prices, and exerts a redistributive effect across subjects. By contrast, an increase in money through lump-sum transfers does not distort real allocation.

Keywords: laboratory experiment; money neutrality; credit expansion; lump-sum monetary transfers (search for similar items in EconPapers)
JEL-codes: C92 E52 E58 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-exp, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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ftp://ftp.gate.cnrs.fr/RePEc/2015/1516.pdf (application/pdf)

Related works:
Journal Article: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2018)
Working Paper: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2018)
Working Paper: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1516

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