The Monetary Transmission Mechanism

Jess Benhabib and Roger Farmer

Working Papers from C.V. Starr Center for Applied Economics, New York University

Abstract: Most authors have attributed the real effects of money in the short run either to mistaken expectations or to non-market clearing or both. In this paper we argue that neither of these channels is needed to explain the facts. We show that a competitive market clearing model in which money enters the production function is fully capable of mimicking the broad features of the data. Our argument relies on an explanation of "price stickiness" that exploits a multiplicity of equlibria in a rational expectations model.

Keywords: BUSINESS CYCLES; MONETARY POLICY; CENTRAL BANKS; MONEY; INTEREST RATE (search for similar items in EconPapers)
JEL-codes: E32 E40 E50 E52 E58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1996
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Monetary Transmission Mechanism (2000)
Working Paper: The Monetary Transmission Mechanism (1999)
Working Paper: The Monetary Transmission Mechanism (1998)
Working Paper: The Monetary Transmission Mechanism (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:cvs:starer:96-13

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