Money and capital
The effects of money (anticipated inflation) on capital formation is a classic issue in macroeconomics. Previous papers adopt reduced-form approaches, putting money in the utility function, or imposing cash in advance, but using otherwise frictionless models. We follow instead a literature that tries to be explicit about the frictions making money essential. This introduces new elements, including a two-sector structure with centralized and decentralized markets, stochastic trading opportunities, and bargaining. These elements matter quantitatively and numerical results differ from findings in the reduced-form literature. The analysis also reduces a gap between microfounded monetary economics and mainstream macro.
Year of publication: |
2011
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Authors: | Aruoba, S. Boragan ; Waller, Christopher J. ; Wright, Randall |
Published in: |
Journal of Monetary Economics. - Elsevier, ISSN 0304-3932. - Vol. 58.2011, 2, p. 98-116
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Publisher: |
Elsevier |
Saved in:
Online Resource
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