Liquidity and real activity in three monetary models

Don Schlagenhauf and Jeffrey Wrase

No 68, Discussion Paper / Institute for Empirical Macroeconomics from Federal Reserve Bank of Minneapolis

Abstract: This paper investigates interest rate determination and evolutions of nominal and real variables in alternative monetary, general equilibrium models. Three approaches to characterizing monetary transactions services are utilized: a cash-in-advance approach, in which agents face cash constraints on goods purchases; a transaction-cost approach, in which goods are sacrificed in transactions; and a shopping-time approach, in which leisure is sacrificed in transactions. Models which employ these approaches are used to examine liquidity effects of monetary innovations on interest rates and real activity.

Keywords: Liquidity (Economics); Monetary policy (search for similar items in EconPapers)
Date: 1992
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