Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/200187
Authors: 
Huber, Samuel
Kim, Jaehong
Marchesiani, Alessandro
Year of Publication: 
2019
Series/Report no.: 
Working Paper 324
Abstract: 
We develop a dynamic general equilibrium model to analyze the relationship between monetary policy, money demand, and unemployment. Our model succeeds in replicating the empirical fact of a downward sloping Phillips curve for low inflation rates and an upward sloping curve for high inflation rates. The reason is that low inflation rates make saving, as opposed to consumption, more attractive. Less consumption is associated with less output and therefore higher unemployment. To the contrary, when inflation exceeds a certain threshold, money is too costly to hold, which results in a decrease in output and an increase in unemployment.
Subjects: 
money
inflation
overlapping generations
unemployment
JEL: 
D90
E31
E41
E50
Document Type: 
Working Paper
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