A Comparison of Exchange Economies Within a Monetary Business Cycle

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract The paper sets out a monetary business cycle model with three alternative exchange technologies, the cash-only, shopping time, and credit production models. The goods productivity and money shocks a¤ect all three models, while the credit model has in addition a credit productivity shock. The paper compares the performance of the models in explaining the puzzles of the monetary business cycle theory. The credit model improves the ability to explain the procyclic movement of monetary aggregates, in ‡ation and the nominal interest rate. Terms of use: Documents in

The welfare cost of inflation with banking time

“…Making the substitution of consumption goods for deposited funds, apply the balance constraint that d t = c t ; since the bank problem is not decentralized here. Then as in Gillman andNakov (2003, 2004), Gillman and Kejak (2004, , Benk et al (2005aBenk et al ( , 2005bBenk et al ( , 2008Benk et al ( , 2010, Gillman and Yerokhin (2005) and Gillman and Otto (2007), the consumer acts also as banker and produces the credit service so that the normalized credit production function can be written as q…”

“…FRED data (series A794RX0Q048SBEA), the average real per-capita consumption in 2009 dollars is $22432 from Jan. 1959 to Jan. 2018. Put this $22432 in current prices by factoring it by the change in the CPI from May 2009 to March 2018, so as to give an additional factor of 250 213 for $22432: Then the calibration of is that = ; within the range of (0:11; 0:21) calibrated inBenk et al (2005aBenk et al ( ,b, 2008Benk et al ( , 2010.Now use equations (20) and (21), such that R =b qt ct 1; with qt ct = 0:545 andbw (A Q )1 . Then we have that R = 0:061 =b (0:545) 11)(A Q ) 1=0:11 ; then 8: 24 = w (0:11)(A Q ) 1=0:11 :With a normalization of w = 1; then A Q = 01: So in sum, the baseline calibration assumes that w = 1; A Q = 1:01; = 0:11; and R = 0:061; such that the targeted M ZM velocity of 2:2 is achieved; in addition = 0:5: As a percent of GDP, the estimates of the welfare cost of in ‡ation as a share of full income (1 w) resulting from the calibrations here will in turn rise by a factor of 1:5; since y = c ' 0:67 in the model with = 0:5.As a second alternative calibration (in addition to setting = 1 instead of = 0:5);consider using the historical average of M1 velocity instead of MZM velocity.…”