Money and capital

Aruoba, S. Borağan; Waller, Christopher J.; Wright, Randall

doi:10.1016/j.jmoneco.2011.03.003

Cited by 91 publications

(74 citation statements)

References 51 publications

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“…We then follow Aruoba et al. () to set

α = 0.15

so that in 15% of trades in the day market, credit is available . The values of the remaining parameters, B , π, and χ, are chosen such that the money demand function matches the U.S. historical data of the average M1–GDP ratio .…”

Section: Numerical Exercisementioning

confidence: 99%

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On the Welfare Effects of Credit Arrangements

Chiu

Shao

2018

Int Economic Review

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This article studies the welfare effects of credit arrangements and how these effects depend on the trading mechanism and inflation. In a competitive market, credit arrangements can be welfare reducing, because high consumption by credit users drives up the price level, reducing consumption by money users who are subject to a binding liquidity constraint. By adopting an optimal trading mechanism, however, these welfare implications can be overturned. Both price discrimination and nonlinear pricing are essential features of an optimal mechanism.

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“…We then follow Aruoba et al. () to set

α = 0.15

Section: Numerical Exercisementioning

confidence: 99%

“…Aruoba et al. () justify the choice of the value of α: “First, Klee (2008) finds that shoppers use credit cards in 12 percent of total transactions in the supermarket scanner data. … Second, using earlier consumer survey data, Cooley and Hansen (1991) come up with a similar measure of around 16 percent.”…”

mentioning

confidence: 99%

On the Welfare Effects of Credit Arrangements

Chiu

Shao

2018

Int Economic Review

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“…Also, Berentsen et al (2007) investigate the optimal monetary policy in presence of search externalities. Also, this paper is related to previous studies that investigate the optimal monetary policy with physical capital, e.g., Aruoba et al (2011), in that human and physical capital share a lot of common features.…”

Section: Introductionmentioning

confidence: 95%

Optimal policy in an economy with human capital where money is essential

Jeong

2015

Economics Letters

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“…This would be especially natural in models with housing, which can be modeled as a capital input in the home production function. state, with D 1 at the sample average, we generate a 30% markup in the KM market to match data in the Annual Retail Trade Survey (see Aruoba et al, 2011).…”

Section: Calibrationmentioning

confidence: 99%