Banking and the role of money in the business cycle

Francesco Zanetti

Journal of Macroeconomics, 2012, vol. 34, issue 1, 87-94

Abstract: This paper enriches a standard New Keynesian model with a simple banking sector to investigate the role of money in the business cycle. Maximum likelihood estimation of the model suggests that money balances play a significant role in explaining the intertemporal allocation of consumption and the dynamics of inflation as described by the forward-looking IS and Phillips curves. Nonetheless, the responses of the model’s variables to shocks remain qualitatively similar to a model without money, suggesting that the omission of money balances leaves the model’s transmission mechanism unaffected.

Keywords: Money; Business cycle (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164070411000541
Full text for ScienceDirect subscribers only

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:eee:jmacro:v:34:y:2012:i:1:p:87-94

DOI: 10.1016/j.jmacro.2011.07.003

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().