In macroeconomic models, the level of price dispersion - which is typically approximated through its relationship with inflation - is a central determinant of welfare, the cost of business cycles, the optimal rate of inflation, and the tradeoff between inflation and output stability. While the...

This paper aims to integrate the money market into the structure of the economy. The microfoundation is the starting point to define the money market and the general equilibrium mechanism of the economy. On this basis, this research seeks a linking mechanism of the money market with economic...

Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its "money supply surprise" model lost its central place in the area within a decade because of empirical difficulties. However, Lucas's novel methodology, based on clearing markets and rational...

The purpose is to examine some of the links in the chain which is said to run from the rate of interest to the rate of inflation. It is argued that that there is a tendency to slip from arguments which that the rate of interest is related to the price level to suggesting that the rate of...

In macroeconomic models, the level of price dispersion - which is typically approximated through its relationship with inflation - is a central determinant of welfare, the cost of business cycles, the optimal rate of inflation, and the tradeoff between inflation and output stability. While the...

This paper aims to integrate the money market into the structure of the economy. The microfoundation is the starting point to define the money market and the general equilibrium mechanism of the economy. On this basis, this research seeks a linking mechanism of the money market with economic...

Lucas (1972) was a paper that permanently changed the course of macroeconomics, even though its "money supply surprise" model lost its central place in the area within a decade because of empirical difficulties. However, Lucas's novel methodology, based on clearing markets and rational...

We study the effects of inflation in a competitive search model where each buyer's utility is private information, and where money is essential in facilitating trade. The equilibrium is efficient at the Friedman rule, but inflation creates an inefficiency in the terms of trade. Buyers experience...

This paper advances a highly tractable model with search theoretic foundations for money and neoclassical growth. In the model, manufacturing and commerce are distinct and separate activities. In manufacturing, goods are efficiently produced combining capital and labor. In commerce, goods are...

This paper investigates the possible responses of an inflation-targeting monetary policy in the face of asset price deviations from fundamental values. Focusing on the housing sector of the Colombian economy, we consider a general equilibrium model with frictions in credit market and bubbles in...