An heterogeneous-agent New-Monetarist model with an application to unemployment

Guillaume Rocheteau, Pierre-Olivier Weill and Russell Wong

Journal of Monetary Economics, 2021, vol. 117, issue C, 64-90

Abstract: A New-Monetarist model is constructed with expenditure and unemployment risks that generates equilibria with non-degenerate distribution of money holdings. Distributional effects can overturn key insights of the model with degenerate distributions, e.g., the value of money depends on the income distribution; a one-time money injection raises aggregate real balances in the short run – price adjustments look sluggish; anticipated inflation can raise output and welfare; there can be a long-run trade-off between inflation and unemployment. Distributional effects also generate a quantitatively significant aggregate demand channel through which transfers financed with money creation can raise employment, and productivity shocks are amplified.

Keywords: Money; Search; Distributions; Inflation (search for similar items in EconPapers)
JEL-codes: E40 E50 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: An Heterogeneous-Agent New-Monetarist Model with an Application to Unemployment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:117:y:2021:i:c:p:64-90

DOI: 10.1016/j.jmoneco.2019.11.006

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