The Adjustment of Prices to Monetary Shocks When Trade is Uncertain and Sequential

Benjamin Eden ()

No 1994.02, Bank of Israel Working Papers from Bank of Israel

Abstract: Trade: is both uncertain and sequential. Money surprises are not neutral because prices at the beginning of the trading process cannot depend on its end. Unlike fixed price models, here sellers can change prices during trade. Unlike Lucas (1972) , here there is no asymmetry in the information about the money supply. The price quoted by individual sellers may adjust slowly to changes in the targeted money supply, but the distribution of quoted prices adjusts perfectly to these changes and the real price distribution is independent of the anticipated rate of change in the money supply.

Pages: 35 pages
Date: 1994-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

Downloads: (external link)
https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_1994.02.pdf First version, 1994 (application/pdf)

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:boi:wpaper:1994.02

Access Statistics for this paper

More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Yossi Yakhin ().