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This paper studies the behavior of the economy and the efficacy of monetary policy under zero nominal interest rates, using a model with population growth that nests, as a special case, a more conventional specification in which there is a single infinitely lived representative agent. The paper...
Persistent link: https://www.econbiz.de/10014063656
The M2 money supply has grown by almost 40% since 2019. This number by itself raises the strong possibility that we have entered a new and remarkable era in United States monetary history. But what would Milton Friedman say? Drawing on Friedman’s writings and a fresh look at the data on money,...
Persistent link: https://www.econbiz.de/10014076899
Previous studies of disinflation work with models in which firms use time- dependent strategies, changing nominal prices at intervals of fixed length. These models may be criticized for failing to allow pricing behavior to adjust after a large shift in policy regime. Consequently, this paper...
Persistent link: https://www.econbiz.de/10014112330
When firms set nominal prices in advance, optimal monetary policy insulates aggregate output against shocks to demand. It can do so, however, by following the constant money growth rule advocated by Milton Friedman; it need not respond to the shocks in an actively countercyclical way. In...
Persistent link: https://www.econbiz.de/10014114232
This paper develops a general equilibrium model in which households face fixed costs associated with searching for a new supplier of consumption goods. These search costs provide firms with some monopoly power over their existing customers and generate the kind of customer flow dynamics first...
Persistent link: https://www.econbiz.de/10014083026
Persistent link: https://www.econbiz.de/10013388325
Persistent link: https://www.econbiz.de/10014281780
In models with heterogeneous agents, issues of distribution and redistribution jump to the fore, raising the question: Which policies - monetary or fiscal - work most effectively in transferring income between groups? From Townsend's turnpike model, two basic results emerge to help answer this...
Persistent link: https://www.econbiz.de/10014065171
This paper develops a general equilibrium model in which households face fixed costs associated with searching for a new supplier of consumption goods. These search costs provide firms with some monopoly power over their existing customers and generate the kind of customer flow dynamics first...
Persistent link: https://www.econbiz.de/10004993865
This paper characterizes optimal monetary policy in the context of a general equilibrium model with optimizing agents and staggered price setting. Starting from a steady state with positive inflation, a rapid disinflation is desirable when announcements of future monetary policy are fully...
Persistent link: https://www.econbiz.de/10004993939