The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab

Romain Baeriswyl and Camille Cornand
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Romain Baeriswyl: Swiss National Bank - Swiss National Bank

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Abstract: In an experimental monetary general equilibrium economy, we assess two processes of monetary injection: credit expansion vs. lump-sum monetary transfers. In theory, both processes are neutral and exert no real effect on allocation. In the experiment, however, credit expansion leads to substantial distortions of real allocation and relative prices, and exerts a redistributive effect across subjects. By contrast, an increase in money through lump-sum transfers does not distort real allocation.

Keywords: lump-sum monetary transfers; laboratory experiment; credit expansion; money neutrality (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

Published in B.E. Journal of Macroeconomics, 2018, 18 (2), ⟨10.1515/bejm-2017-0037⟩

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Related works:
Journal Article: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2018)
Working Paper: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2015)
Working Paper: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01653459

DOI: 10.1515/bejm-2017-0037

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