Liquidity Effects and Transactions Technologies
Recently there has been growing interest in using general equilibrium models to understand the effects of monetary policy on interest rates and real economic activity. This research effort has involved the search for models that generate liquidity effects. One branch of this research employs cash-in-advance constraints and various assumptions about financial structures that place infinite transaction costs on flow of funds across segmented markets. In this paper, the authors relax the assumption of infinite transactions costs and find that liquidity effects either disappear or are greatly dampened when transaction technologies are more appropriately specified. Copyright 1995 by Ohio State University Press.
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Volume (Year): 27 (1995)
Issue (Month): 4 (November)
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- Gordon, David B & Leeper, Eric M, 1994. "The Dynamic Impacts of Monetary Policy: An Exercise in Tentative Identification," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1228-1247, December.
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- Lucas, Robert Jr., 1990. "Liquidity and interest rates," Journal of Economic Theory, Elsevier, vol. 50(2), pages 237-264, April.
- Don E. Schlagenhauf & Jeffrey M. Wrase, 1992. "Liquidity and real activity in three monetary models," Discussion Paper / Institute for Empirical Macroeconomics 68, Federal Reserve Bank of Minneapolis.
- Fuerst, Timothy S., 1992. "Liquidity, loanable funds, and real activity," Journal of Monetary Economics, Elsevier, vol. 29(1), pages 3-24, February.
- Lawrence J. Christiano, 1991. "Modeling the liquidity effect of a money shock," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 3-34. Full references (including those not matched with items on IDEAS)
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