This paper studies an overlapping generations economy with capital where limited communication and stochastic relocation create an endogenous transactions role for fiat money. We assume a production function with a knowledge externality (Romer-style) that nests economies with endogenous growth...

We explore the connection between optimal monetary policy and heterogeneity among agents. We utilize a standard monetary economy with two types of agents that differ in the marginal utility they derive from real money balances — a framework that produces a nondegenerate stationary distribution...

The purpose of this paper is focus directly on the phase shift. For one thing, we ask whether a sticky-price model economy can account for both countercyclical prices and procyclical inflation. We present findings in which the price level is countercyclical and the inflation rate is procyclical....

In this paper we examine the interactions between fiscal and monetary policy in an economy with financial frictions, where fiat money, bank deposits and short and long-term nominal bonds coexist. Because agents face information frictions and bankers have limited commitment, fiat money is always...

In this paper, we argue that the observed difference in the cost of intraday and overnight liquidity is part of an optimal payments system design. In our environment, the interest charged on overnight liquidity affects output, while the cost of intraday liquidity only affects the distribution of...

Central bank communications need interpretation. We contribute to the communications literature by focusing on the effort expended on deciphering central bank communications. We build a model economy in which banks provide a deposit/insurance function for consumers subject to idiosyncratic...

Central bank communications need interpretation. We contribute to the communications literature by focusing on the effort expended on deciphering central bank communications. We build a model economy in which banks provide a deposit/insurance function for consumers subject to idiosyncratic...