Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23189
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dc.contributor.authorOcchino, Filippoen_US
dc.date.accessioned2009-01-29T15:49:26Z-
dc.date.available2009-01-29T15:49:26Z-
dc.date.issued2004en_US
dc.identifier.urihttp://hdl.handle.net/10419/23189-
dc.description.abstractIn the data, after a contractionary monetary policy shock aggregate output decreases over time, with a trough after four to eight quarters. This paper replicatesthe `hump-shaped' response of output with a segmented markets model where part ofthe households are excluded from financial markets. A contractionary monetary policy shock is modeled as an unanticipated increase in the short-term nominal interest rate. Since households and firms need cash-in-advance to purchase consumption andhire labor, an increase in the nominal interest rate discourages the households' consumption demand and labor supply, and the firms' labor demand. In a benchmark fullparticipation model, the effect is strongest in the impact period, and decays over time.When markets are segmented, however, the shock has an additional liquidity effect,increasing the real interest rate above fundamentals, and decreasing the growth rateof the participants' labor supply. As a result, the response of the aggregate labor andoutput has a trough several quarters after the shock. The model is able to replicatethe sign, the magnitude and the persistence of the responses of output, money, pricesand interest rates. It can generate a positive response of the real interest rate togetherwith a negative response of the output growth rate.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseries|aWorking papers / Rutgers University, Department of Economics |x2004,10en_US
dc.subject.jelE52en_US
dc.subject.ddc330en_US
dc.subject.keywordlimited participationen_US
dc.subject.keywordsegmented marketsen_US
dc.subject.keywordhump-shaped delayed responseen_US
dc.subject.keywordmonetary policy shocksen_US
dc.subject.keywordpersistenceen_US
dc.subject.stwMarktsegmentierungen_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwSchocken_US
dc.subject.stwCash-in-Advance-Modellen_US
dc.subject.stwArbeitsangeboten_US
dc.titleMarket Segmentation and the `Hump-Shaped' Response of Output to Monetary Policy Shocksen_US
dc.typeWorking Paperen_US
dc.identifier.ppn389549746en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-

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