Competitive Search Equilibrium with Private Information on Monetary Shocks
The relationship between unanticipated inflation and output has been a classic issue in macroeconomics. This paper studies the effects of monetary uncertainty on output in a competitive search environment where there is asymmetric information about monetary shocks. In such an environment, sellers post prices that are contingent on the realization of the shock, and buyers then direct their search towards the most attractive price. The paper proposes a new mechanism for real output effects of monetary shocks: when the realization of the monetary shock is privately observed by buyers, to induce truth-telling behavior, sellers offer more output when the economy experiences a positive monetary shock; otherwise, buyers have an incentive to lie about the state of the world in order to pay low prices. This contrasts with the centralized Walrasian market environment, where nominal shocks by themselves have no real effects.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 9 (2009)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://www.degruyter.com|
|Order Information:||Web: http://www.degruyter.com/view/j/bejm|
When requesting a correction, please mention this item's handle: RePEc:bpj:bejmac:v:9:y:2009:i:1:n:10. 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: (Peter Golla)
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.