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Working Paper 2009-031A Search | View by Year | View by Category | View by Author | View by JEL Code"Money and Capital: A Quantitative Analysis"
We study the effects of money (anticipated inflation) on capital formation. Previous papers on this adopt reduced-form approaches, putting money in the utility function or imposing cash in advance, but use otherwise frictionless models. We follow a literature that is more explicit about the frictions that make money essential. This introduces several new elements, including a two-sector structure with centralized and decentralized markets, stochastic trading opportunities, and bargaining. We show how these elements matter qualitatively and quantitatively. Our numerical results differ from findings in the reduced-form literature. The analysis also reduces the gap between monetary theory and mainstream macro. Full Text - Acrobat PDF (1.1M) Notify Me of Updates for:
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