Advanced Search
MyIDEAS: Login to save this paper or follow this series

Money In A Model With Overlapping Production Activities

Contents:

Author Info

  • Miquel Faig

Abstract

This paper advances a model which can account for these five prominent facts of monetary economics. (i) Money is held in non trivial amounts even though it is a dominated asset. (ii) High rates of inflation lead to low rates of growth. (iii) Monetary injections momentarily depress the rate of interest. (iv) Hyper-inflations can be ended with a minimal loss of output. (v) Liquidity crises lead to recessions. The model advanced develops the second variation in Woodford (1990). The model is designed to capture three features of reality, which form the basis for modeling money as a dominated asset: Income and expenditures by households and firms are not synchronized. Money is used to transfer income from the time it is received to the time it is spent because real assets are costly to liquidate, and capital markets are imperfect. And money improves the allocation of resources by providing flexibility to the timing of consumption and investment. In this model, monetary shocks affect total factor productivity. Hence, the model offers a link between the real business cycle model and a monetary approach to the business cycle.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-FAIG-98-03.ps
File Function: Main Text
Download Restriction: no

File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-FAIG-98-03-s.ps
File Function: Addendum
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number faig-98-03.

as in new window
Length: 32 pages
Date of creation: 26 May 1998
Date of revision:
Handle: RePEc:tor:tecipa:faig-98-03

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords: Money; long lived projects;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Canadian Macro Study Group

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:faig-98-03. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.