Chadha, Jagjit S.; Corrado, Luisa; Sun, Qi - 2008
In the canonical monetary policy model, money is endogenous to the optimal path for interest rates and output. But when … liquidity provision by banks dominates the demand for transactions money from the real economy, money is likely to contain … information for future output and inflation because of its impact on financial spreads. And so we decompose broad money into …
