Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38808
Authors: 
Enders, Zeno
Year of Publication: 
2010
Series/Report no.: 
Bonn econ discussion papers 2010,8
Abstract: 
This paper examines the implications of segmented assets markets for the 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 non-degenerate, long-lasting heterogeneity in wealth. As a result, the effective elasticity of substitution differs across households, affecting optimal markups chosen by producers. In line with empirical evidence, the model predicts a short-term inflation-output trade-off, a liquidity effect, countercyclical markups, and procyclical profits and wages after monetary shocks.
Subjects: 
Segmented Asset Markets
Monetary Policy
Countercyclical Markups
Liquidity Effect
Limited Participation
JEL: 
E31
E32
E51
Document Type: 
Working Paper

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