Kim, Hwagyun; Subramanian, Chetan - In: Journal of Money, Credit and Banking 38 (2006) 4, pp. 1077-1091
This paper evaluates quantitatively the effect of real money balances in a New Keynesian framework. Money in our model facilitates transactions and is introduced through a transactions cost technology. This technology acts like a distortionary consumption tax which varies endogenously with the...