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A Segmented Markets Model to Teach Analysis of Monetary Policy Shocks in Developing Economies

Parag Waknis ()

MPRA Paper from University Library of Munich, Germany

Abstract: The standard undergraduate textbook models in macroeconomics like the IS-LM/AD-AS model are not disaggregated enough to understand the effects of monetary policy shocks in developing economies typically characterized by substantial informality, and goods and financial markets segmentation. In this paper, I present a version of a segmented markets model based on Williamson (2009, 2011) that could be used as an effective alternative. I demonstrate the use of the framework by analyzing the effects of demonetization- a substantial reduction in the availability of outside money- in a developing country setting.

Keywords: segmented markets; developing countries; demonetization; economic education; informal markets; undergraduate macroeconomics. (search for similar items in EconPapers)
JEL-codes: A22 E42 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-iue, nep-mac and nep-mon
Date: 2017-03-28
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78011

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