Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189263 
Authors: 
Year of Publication: 
1997
Series/Report no.: 
Queen's Economics Department Working Paper No. 966
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This paper examines a monetary propagation mechanism in an economy where exchnages in goods and labor markets involve costly search. It is shown that an increase in the money growth rate increases steady state employment and output when the money growth rate is low but reduces steady state and output when the money growth rate is already high. The model produces persistent, hump-shaped responses in employment and output to money growth shocks even when the shocks have no persistence. The model also generates desirable features on job vacancy, sales, inventory, and the velocity of money. All these features emerge here in an economy with perfectly flexible prices and wages.
Subjects: 
Search
Monetary propagation
Inventory
Hump shape
JEL: 
E30
E40
Document Type: 
Working Paper

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