Non-Neutral Responses to Money Supply Shocks when Consumption and Leisure are Pareto Substitutes

K-J Matheny

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: To a greater extent than is often stressed in extant literature, preference assumptions affect responses to monetary shocks in representative agents models. Temporary money shocks can have persistent real effects in cash in advance models if the marginal utility of leaisure is a decreasing function of consumption, where leisure is measured as time endowment less market labor effort, and consumption refers to market produced goods.

Keywords: BUSINESS CYCLES; MONEY SUPPLY (search for similar items in EconPapers)
JEL-codes: E32 E51 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1090

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