Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/83214 
Authors: 
Year of Publication: 
2002
Series/Report no.: 
Volkswirtschaftliche Diskussionsbeiträge No. 103-02
Publisher: 
Universität Siegen, Fakultät III, Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht, Siegen
Abstract: 
This paper considers the implications of adding capital as a factor of production in a stochastic DGE model with sticky prices. Particular attention is given to the role of money demand and to the form of the utility function. I consider cash-in-advance- (CIA) as well as money-in-the-utility-function- (MIU) models, with CRRA and GHH preferences, to evaluate their ability to generate persistence. It is shown that even in a MIU-model with a GHH utility function and a high elasticity of labor supply with respect to the real wage the additional intertemporal substitution channel opened through capital accumulation does have a significant dampening influence on the persistence effects of monetary shocks. In a CIA-setup with GHH preferences the model can generate the liquidity effect. A multiplicatively separable CRRA utility function in the MIU-model cannot account for the observed persistent reactions of inflation and output either.
Subjects: 
Monetary Policy
New Neoclassical Synthesis
Sticky Prices
Persistency
JEL: 
E52
Document Type: 
Working Paper

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