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: money neutrality; credit expansion; lump-sum monetary transfers; laboratory experiment; money neutrality; credit expansion; lump-sum monetary transfers (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cba, nep-exp, nep-mac and nep-mon
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01161854v4
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Citations: View citations in EconPapers (2)

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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 (2018)
Working Paper: The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab (2015)
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