EconPapers    
Economics at your fingertips  
 

Effectiveness of monetary policy and limited asset market participation: Neoclassical versus Keynesian effects

Giovanni Di Bartolomeo () and Lorenza Rossi ()

International Journal of Economic Theory, 2007, vol. 3, issue 3, 213-218

Abstract: This paper investigates the effects of limited asset market participation on the effectiveness of monetary policy in a New Keynesian Dynamic Stochastic General Equilibrium model. Although an increase in consumers who cannot access financial markets reduces the effects of interest rate policies through consumption inter‐temporal allocation (neoclassical or permanent income effect), we find an opposite result: monetary policy becomes more effective as the degree of financial market participation falls. The reason has a very Keynesian flavor.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/j.1742-7363.2007.00056.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:3:y:2007:i:3:p:213-218

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1742-7355

Access Statistics for this article

International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano

More articles in International Journal of Economic Theory from The International Society for Economic Theory
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-10-21
Handle: RePEc:bla:ijethy:v:3:y:2007:i:3:p:213-218