|
Archive@NYU >
Stern School of Business >
Salomon Center >
Macro Finance >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27329
|
| Title: | A Unified Framework for Monetary Theory and Policy Analysis |
| Authors: | Lagos, Ricardo
Wright, Randall |
| Issue Date: | 6-Nov-2003 |
| Series/Report no.: | S-MF-03-21 |
| Abstract: | Search-theoretic models of monetary exchange are based on explicit
descriptions of the frictions that make money essential. However,
tractable versions of these models typically need strong assumptions
that make them ill-suited for studying monetary policy. We propose a
framework based on explicit micro foundations within which macro policy
can be analyzed. The model is both analytically tractable and amenable
to quantitative analysis. We demonstrate this by using it to estimate
the welfare cost of inflation. We find much higher costs than the
previous literature: our model predicts that going from 10% to 0%
inflation can be worth between 3% and 5% of consumption. |
| URI: | http://hdl.handle.net/2451/27329 |
| Appears in Collections: | Macro Finance
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
