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dc.contributor.authorHong, Haoen_US
dc.date.accessioned2011-07-14en_US
dc.date.accessioned2012-11-02T14:27:35Z-
dc.date.available2012-11-02T14:27:35Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/65767-
dc.description.abstractThis paper explains and evaluates the transmissions and effectiveness of monetary policy shock in a simple Cash-in-Advance (CIA) economy with financial intermediates. Lucas-Fuerst's (1992) limited participation CIA models are able to explain decreasing nominal interest rates and increasing real economic activity with monetary expansion through limited participation monetary shock and the cost channel of monetary policy. Calvo's (1983) sticky price monetary model examines the real effects of money injections through firms price setting behaviour, but it fails to generate a negative correlation between nominal interest rates and money growth rate, which has been observed in the data. This paper employs McCandless (2008) financial intermediates CIA model to explain the transmissions and impacts of monetary shocks. The model does not request limited participation monetary shock or Keynesian type of sticky price/wage, to examine the lower nominal interest rate and increasing real economic activity with monetary expansion. By extending the model with Stockman's (1981) CIA constraint, it is able to account for both positive response of consumption subject to monetary innovations, which has been found in Leeper et al. (1996) and the positive correlation between output and consumption which has been observed in the data.en_US
dc.language.isoengen_US
dc.publisherCardiff Univ, Cardiff Business School, Economics Section Cardiffen_US
dc.relation.ispartofseriesCardiff Economics Working Papers E2011/16en_US
dc.subject.jelE44en_US
dc.subject.jelE52en_US
dc.subject.ddc330en_US
dc.subject.keywordmonetary business cycleen_US
dc.subject.keywordfinancial intermediateen_US
dc.subject.keywordcash-in-advance modelen_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwFinanzintermediären_US
dc.subject.stwSchocken_US
dc.subject.stwTransmissionsmechanismusen_US
dc.subject.stwGesamtwirtschaftlicher Konsumen_US
dc.subject.stwTheorieen_US
dc.titleMonetary aggregates, financial intermediate and the business cycleen_US
dc.typeWorking Paperen_US
dc.identifier.ppn664239730en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
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