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The Barnett Critique After Three Decades: A New Keynesian Analysis / Michael T. Belongia, Peter N. Ireland.
- Format:
- Book
- Author/Creator:
- Belongia, Michael T.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w17885.
- NBER working paper series no. w17885
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2012.
- Summary:
- This paper extends a New Keynesian model to include roles for currency and deposits as competing sources of liquidity services demanded by households. It shows that, both qualitatively and quantitatively, the Barnett critique applies: While a Divisia aggregate of monetary services tracks the true monetary aggregate almost perfectly, a simple-sum measure often behaves quite differently. The model also shows that movements in both quantity and price indices for monetary services correlate strongly with movements in output following a variety of shocks. Finally, the analysis characterizes the optimal monetary policy response to disturbances that originate in the financial sector.
- Notes:
- Print version record
- March 2012.
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