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Comment on Long and Plosser meet Bewley and Lucas

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  • Khan, Aubhik

Abstract

Feng Dong and Yi Wen introduce money into the Long and Plosser multi-sector real business cycle model. Money exists as a liquid asset that allows households to respond to idiosyncratic preference shocks. Despite the resulting heterogeneity in consumption, a constant marginal utility of leisure implies that households eliminated differences in their wealth each period. I argue that this framework implies excessive consumption volatility at the household level.

Suggested Citation

  • Khan, Aubhik, 2019. "Comment on Long and Plosser meet Bewley and Lucas," Journal of Monetary Economics, Elsevier, vol. 102(C), pages 93-95.
    • Handle: RePEc:eee:moneco:v:102:y:2019:i:c:p:93-95
    DOI: 10.1016/j.jmoneco.2019.02.001
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    References listed on IDEAS

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