Search For A Monetary Propagation Mechanism

Shouyong Shi

No 966, Working Paper from Economics Department, Queen's University

Abstract: This paper examines a monetary propagation mechanism in an economy where exchnages in goods and labor markets involve costly search. It is shown that an increase in the money growth rate increases steady state employment and output when the money growth rate is low but reduces steady state and output when the money growth rate is already high. The model produces persistent, hump-shaped responses in employment and output to money growth shocks even when the shocks have no persistence. The model also generates desirable features on job vacancy, sales, inventory, and the velocity of money. All these features emerge here in an economy with perfectly flexible prices and wages.

Keywords: Hump shape; Search; Monetary propagation; Inventory (search for similar items in EconPapers)
JEL-codes: E30 E40 (search for similar items in EconPapers)
Pages: 49 pages
Date: 1997-08
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_966.pdf First version 1997 (application/pdf)

Related works:
Journal Article: Search for a Monetary Propagation Mechanism (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:966

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