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On the long-run relationship between inflation and output in a spatial overlapping generations model

  • Anthonisen, Niels
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    The paper builds a model that features spatial differentiation of markets, and then uses it to study, first, the relationship between inflation and the steady-state level of output, and second, the relationship between inflation and the steady-state distribution of output across the economy. A steady-state of the model entails a stationary distribution of money across the locations of the economy. With all else held fixed, a change in the rate of money-growth induces a change in the distribution of money, which leads to a change in labour supply and production throughout the economy. Thus the distribution of money provides a channel through which a change in monetary policy affects real economic activity.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165188913001413
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    Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

    Volume (Year): 37 (2013)
    Issue (Month): 12 ()
    Pages: 2500-2524

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    Handle: RePEc:eee:dyncon:v:37:y:2013:i:12:p:2500-2524
    Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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