Cordoba, Juan Carlos; Ripoll, Marla - In: Journal of the European Economic Association 2 (2004) 6, pp. 1172-1205
This paper reviews the role of collateral constraints in transforming small monetary shocks into large persistent output fluctuations.We do this by introducing money in the heterogeneous-agent real economy of Kiyotaki and Moore (1997). Money enters in a cash-in-advance constraint and money...