IDEAS home Printed from https://ideas.repec.org/a/cup/macdyn/v17y2013i06p1330-1354_00.html
   My bibliography  Save this article

Optimal Monetary And Fiscal Policies In A Search-Theoretic Model Of Money And Unemployment

Author

Listed:
  • Gomis-Porqueras, Pedro
  • Julien, Benoît
  • Wang, Chengsi

Abstract

In this paper we study the optimal monetary and fiscal policies of a general equilibrium model of unemployment and money with search frictions both in labor and goods markets as in Berentsen, Menzio and Wright (2010). We abstract from revenue-raising motives to focus on the welfare-enhancing properties of optimal policies. We show that some of the inefficiencies in the Berentsen, Menzio and Wright (2010) framework can be restored with appropriate fiscal policies. In particular, when lump sum monetary transfers are possible, a production subsidy financed by money printing can increase output in the decentralized market and a vacancy subsidy financed by a dividend tax even when the Hosios’ rule does not hold.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Gomis-Porqueras, Pedro & Julien, Benoît & Wang, Chengsi, 2013. "Optimal Monetary And Fiscal Policies In A Search-Theoretic Model Of Money And Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 17(06), pages 1330-1354, September.
    • Handle: RePEc:cup:macdyn:v:17:y:2013:i:06:p:1330-1354_00
    as

    Download full text from publisher

    File URL: http://journals.cambridge.org/abstract_S1365100512000016
    File Function: link to article abstract page
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    2. Etienne Lehmann, 2012. "A Search Model of Unemployment and Inflation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(1), pages 245-266, March.
    3. Aleksander Berentsen & Guido Menzio & Randall Wright, 2011. "Inflation and Unemployment in the Long Run," American Economic Review, American Economic Association, vol. 101(1), pages 371-398, February.
    4. Cooley, Thomas F. & Quadrini, Vincenzo, 2004. "Optimal monetary policy in a Phillips-curve world," Journal of Economic Theory, Elsevier, vol. 118(2), pages 174-208, October.
    5. Shi, Shouyong, 1998. "Search for a Monetary Propagation Mechanism," Journal of Economic Theory, Elsevier, vol. 81(2), pages 314-352, August.
    6. Aleksander Berentsen & Guillaume Rocheteau & Shouyong Shi, 2007. "Friedman Meets Hosios: Efficiency in Search Models of Money," Economic Journal, Royal Economic Society, vol. 117(516), pages 174-195, January.
    7. Joshua N. Feinman, 1993. "Reserve requirements: history, current practice, and potential reform," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 569-589.
    8. Christiano, Lawrence J & Eichenbaum, Martin, 1995. "Liquidity Effects, Monetary Policy, and the Business Cycle," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(4), pages 1113-1136, November.
    9. Gomis-Porqueras, Pedro & Peralta-Alva, Adrian, 2010. "Optimal monetary and fiscal policies in a search theoretic model of monetary exchange," European Economic Review, Elsevier, vol. 54(3), pages 331-344, April.
    10. Cooley, Thomas F. & Quadrini, Vincenzo, 1999. "A neoclassical model of the Phillips curve relation," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 165-193, October.
    11. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pedro Gomis-Porqueras & Timothy Kam & Christopher Waller, 2017. "Nominal Exchange Rate Determinacy under the Threat of Currency Counterfeiting," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(2), pages 256-273, April.
    2. Gomis-Porqueras, Pedro & Waller, Christopher J., 2017. "Optimal Taxes Under Private Information: The Role of the Inflation Tax," Working Papers 2017-14, Federal Reserve Bank of St. Louis.
    3. Antonio Ribba, 2017. "What Drives US Inflation and Unemployment in the Long Run?," Economics Bulletin, AccessEcon, vol. 37(2), pages 765-777.
    4. Pedro, Gomis-Porqueras, 2016. "Fiscal Requirements for Price Stability in Economies with Private Provision of Liquidity and Unemployment," MPRA Paper 75113, University Library of Munich, Germany.
    5. Guerrieri, Veronica & Julien, Benoit & Kircher, Philipp & Wright, Randall, 2017. "Directed Search: A Guided Tour," CEPR Discussion Papers 12315, C.E.P.R. Discussion Papers.
    6. repec:taf:oabmxx:v:3:y:2016:i:1:p:1154283 is not listed on IDEAS
    7. Watanabe, Minoru & Miyake, Yusuke & Yasuoka, Masaya, 2018. "Unemployment, Income Growth and Social Security," MPRA Paper 86155, University Library of Munich, Germany.
    8. Daniel Fried, 2017. "Inflation, Default, and the Currency Composition of Sovereign Debt in Emerging Economies: Working Paper 2017-01," Working Papers 52385, Congressional Budget Office.
    9. Alin OPREANA & Simona VINEREAN, 2015. "Analysis of the Economic Research Context after the Outbreak of the Economic Crisis of 2007-2009," Expert Journal of Economics, Sprint Investify, vol. 3(1), pages 77-92.
    10. Antonio Ribba, 2016. "Productivity Growth Shocks and Unemployment in the Postwar US Economy," Department of Economics 0077, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".

    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:macdyn:v:17:y:2013:i:06:p:1330-1354_00. 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: (Keith Waters). General contact details of provider: http://journals.cambridge.org/jid_MDY .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.