Two monetary models with alternating markets

Camera, Gabriele and Chien, YiLi. (2016) Two monetary models with alternating markets. Journal of money, credit, and banking, 48 (5). pp. 1051-1064.

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Official URL: http://edoc.unibas.ch/53503/

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We present a thought-provoking study of two monetary models: the cash-in-advance and the Lagos and Wright (2005) models. The different approaches to modeling money-reduced form versus explicit role-induce neither fundamental theoretical nor quantitative differences in results. Given conformity of preferences, technologies, and shocks, both models reduce to equilibrium difference equations that coincide unless price distortions are differentially imposed on cash prices, across models. Equal distortions support equally large welfare costs of inflation. Performance differences stem from unequal assumptions about the pricing mechanism that governs cash transactions, not the differential modeling of the monetary exchange process.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Ehemalige Einheiten Wirtschaftswissenschaften > Experimental Makroeconomics (Camera)
UniBasel Contributors:Camera, Gabriele
Item Type:Article, refereed
Article Subtype:Research Article
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:26 Jul 2018 14:42
Deposited On:26 Jul 2018 14:42

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