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Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn >
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http://hdl.handle.net/10419/38808
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| Title: | | Heterogeneous consumers, segmented asset markets, and the effects of monetary policy  |
| Authors: | | Enders, Zeno |
| Issue Date: | | 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 |
| Appears in Collections: | | Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn
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