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Short-run and long-run effects of changes in money in a random matching model


  • Neil Wallace


Using an existing random matching model of money, I show that a once-for-all change in the quantity of money has short-run effects that are predominantly real and long-run effects that are in the direction of being predominantly nominal provided (i) the quantity of money is random and (ii) people learn about what happened to it only with a lag. The change in the quantity of money comes about through a random process of discovery that does not permit anyone to deduce the aggregate amount discovered when the change actually occurs.

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  • Neil Wallace, 1996. "Short-run and long-run effects of changes in money in a random matching model," Working Papers 568, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmwp:568

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    Money - Mathematical models;


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