EconStor >
Bank of Canada, Ottawa >
Bank of Canada Working Papers >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/53796
  

Full metadata record

DC FieldValueLanguage
dc.contributor.authorChiu, Jonathanen_US
dc.date.accessioned2011-12-15T12:55:59Z-
dc.date.available2011-12-15T12:55:59Z-
dc.date.issued2007en_US
dc.identifier.urihttp://hdl.handle.net/10419/53796-
dc.description.abstractThis paper studies the effects of monetary policy in an inventory theoretic model of money demand. In this model, agents keep inventories of money, despite the fact that money is dominated in rate of return by interest bearing assets, because they must pay a fixed cost to transfer funds between the asset market and the goods market. Unlike the exogenous segmentation models in the literature, the timings of money transfers are endogenous. By allowing agents to choose the timings of money transfers, the model endogenizes the degree of market segmentation as well as the magnitude of liquidity effects, price sluggishness and variability of velocity. First, I show that the endogenous segmentation model can generate the positive long run relationship between money growth and velocity in the data which the exogenous segmentation model fails to capture. Second, I show that the short run effects of money shocks in an exogenous segmentation model (such as the linear inflation response to money shock, the liquidity effect and the sluggish price adjustment) are not robust. In an endogenous segmentation model, the equilibrium response to money shocks is non-linear and non-monotonic. Moreover, for large money shocks, there is no liquidity effect and no sluggish price adjustment.en_US
dc.language.isoengen_US
dc.publisherBank of Canada Ottawaen_US
dc.relation.ispartofseriesBank of Canada Working Paper 2007,46en_US
dc.subject.jelE31en_US
dc.subject.jelE41en_US
dc.subject.jelE50en_US
dc.subject.ddc330en_US
dc.subject.keywordTransmission of monetary policyen_US
dc.subject.keywordMonetary policy frameworken_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwKassenhaltungsansatzen_US
dc.subject.stwLiquidit├Ątseffekten_US
dc.subject.stwTransmissionsmechanismusen_US
dc.subject.stwTheorieen_US
dc.titleEndogenously segmented asset market in an inventory theoretic model of money demanden_US
dc.typeWorking Paperen_US
dc.identifier.ppn548042519en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Bank of Canada Working Papers

Files in This Item:
File Description SizeFormat
548042519.pdf608.95 kBAdobe PDF
No. of Downloads: Counter Stats
Show simple item record
Download bibliographical data as: BibTeX

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.