The distribution of money balances and the nonneutrality of money

Citation data:

International Economic Review, ISSN: 0020-6598, Vol: 46, Issue: 2, Page: 465-487

Publication Year:
2005
Usage 243
Abstract Views 139
Downloads 61
Full Text Views 41
Link-outs 2
Captures 15
Exports-Saves 15
Citations 42
Citation Indexes 42
Repository URL:
https://digitalcommons.chapman.edu/economics_articles/66
DOI:
10.1111/j.1468-2354.2005.00329.x
Author(s):
Berentsen, Aleksander; Camera, Gabriele; Waller, Christopher
Publisher(s):
Wiley-Blackwell
Tags:
Economics, Econometrics and Finance; Distribution; Non-Neutrality; Economics
article description
Recent monetary models with explicit microfoundations are made tractable by assuming that agents have access to centralized markets after one round of decentralized trade. Given quasi-linear preferences, this makes the distribution of money degenerate - which keeps the models simple but precludes the discussion of distributional effects of monetary policy. We generalize these models by assuming two rounds of trade before agents can readjust their money holdings to study a range of new distributional effects analytically. We show that unexpected, symmetric lump-sum money injections may increase short-run output and welfare, whereas asymmetric injections may increase long-run output and welfare.