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Abstract
This paper examines how segmented asset markets can generate real and nominal effects of monetary policy. I develop a model, in which varieties of consumption bundles are purchased sequentially. Newly injected money thus disseminates slowly through the economy via second-round effects and induces a longer-lasting, non-degenerate wealth distribution. As a result, the demand elasticity differs across consumers, affecting optimal markups chosen by producers. The model predicts a short-term inflation-output trade-off, a liquidity effect, countercyclical markups, and procyclical wages and expenditure dispersion across consumers after monetary shocks. Including a modest degree of real or nominal wage rigidity yields responses that are also quantitatively in line with empirical evidence.
Dokumententyp: | Arbeitspapier |
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Name der Reihe: | Discussion Paper Series / University of Heidelberg, Department of Economics |
Band: | 0537 |
Erstellungsdatum: | 13 Dez. 2012 11:24 |
Erscheinungsjahr: | Dezember 2012 |
Seitenanzahl: | 32 |
Institute/Einrichtungen: | Fakultät für Wirtschafts- und Sozialwissenschaften > Alfred-Weber Institut |
DDC-Sachgruppe: | 330 Wirtschaft |
Freie Schlagwörter: | Segmented Asset Markets , Monetary Policy , Countercyclical Markups , Liquidity Effect , Expenditure Dispersion |
Schriftenreihe: | Discussion Paper Series / University of Heidelberg, Department of Economics |