Adverse Selection, Segmented Markets, and the Role of Monetary Policy
AbstractA model is constructed in which trading partners are asymmetrically informed about future trading opportunities and where spatial and informational frictions limit arbitrage between markets. These frictions create an inefficiency relative to a full information equilibrium, and the extent of this inefficiency is affected by monetary policy. A Friedman rule is optimal under a wide range of circumstances, including ones where segmented markets limit the extent of monetary policy intervention.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 20691.
Date of creation: 2009
Date of revision:
Adverse Selection; Monetary Policy; Search;
Other versions of this item:
- Sanches, Daniel & Williamson, Stephen, 2011. "Adverse Selection, Segmented Markets, And The Role Of Monetary Policy," Macroeconomic Dynamics, Cambridge University Press, vol. 15(S2), pages 269-292, September.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
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21030, University Library of Munich, Germany.
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