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Money and Capital

  • S. Boragan Aruoba

    ()

    (Economics University of Maryland)

  • Christopher J. Waller

We revisit classic questions concerning the effects of money on investment in a new framework: a two-sector model where some trade occurs in centralized and some in decentralized markets, as in recent monetary theory, but extended to include capital. This allows us to incorporate novel elements from the microfoundations literature on trading with frictions, including stochastic exchange opportunities, alternative pricing mechanisms, etc. We calibrate models with bargaining and with price taking in the decentralized market.

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Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 550.

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Date of creation: 2005
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Handle: RePEc:red:sed005:550
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

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