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Working through the Distribution: Money in the Short and Long Run / Guillaume Rocheteau, Pierre-Olivier Weill, Tsz-Nga Wong.
- Format:
- Book
- Author/Creator:
- Rocheteau, Guillaume.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w21779.
- NBER working paper series no. w21779
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Working through the Distribution
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2015.
- Summary:
- We construct a tractable model of monetary exchange with search and bargaining that features a non- degenerate distribution of money holdings in which one can study the short-run and long-run effects of changes in the money supply. While money is neutral in the long run, a one-time money injection in a centralized market with flexible prices generates an increase in aggregate real balances in the short run, a decrease in the rate of return of money, and a redistribution of consumption levels across agents. The price level in the short run varies in a non-monotonic fashion with the size of the money injection, e.g., small injections can lead to short-run deflation while large injections generate inflation. We extend our model to include employment risk and show that repeated money injections can raise output and welfare when unemployment is high.
- Notes:
- Print version record
- December 2015.
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