Monetary policy with linear information costs

Dimitrios Voliotis ()

Journal of Economics, 2013, vol. 110, issue 3, 256 pages

Abstract: The paper adresses the problem of a monetary economy with costs of information, imposed in linear form. In particular, we make use of a strategic market game with money where equilibria are standardly non-Walrasian, permitting an active role to monetary policy. The imposition of information costs alters the demand of real balances since traders demand extra money for gathering and processing the necessary information. As a result, money injections could be proved welfare improving only when the induced information costs do not offset the resulted gains to trade. Copyright Springer-Verlag 2013

Keywords: Central Bank; Transaction costs; Gains to trade; D50; E48; E50; E58 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:110:y:2013:i:3:p:241-256

DOI: 10.1007/s00712-012-0299-z

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