The Monetary Transmission Mechanism

Jess Benhabib and Roger Farmer

Economics Working Papers from European University Institute

Abstract: Since the writing of David Hume, in the eighteenth century, there has been a general agreement amogst economists that an increase in the stock of money leads, initially, to an increase in economic activity. Most writer have attributed the real effects of money, in the short run, to mistaken expectations, non-market clearing or both. We argue instead, that neither of these channels is needed to explain the facts. We show that a competitive market-clearing model in which money enter the production function can reproduce the broad features of data.

Keywords: BUSINESS CYCLES; MONEY; MONETARY POLICY (search for similar items in EconPapers)
JEL-codes: E00 E4 (search for similar items in EconPapers)
Pages: 81 pages
Date: 1999
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Monetary Transmission Mechanism (2000)
Working Paper: The Monetary Transmission Mechanism (1998)
Working Paper: The Monetary Transmission Mechanism (1996)
Working Paper: The Monetary Transmission Mechanism (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco99/35

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