New Monetarist Economics: Methods

Williamson, Stephen D.; Wright, Randall

doi:10.21034/sr.442

Cited by 17 publications

(21 citation statements)

References 93 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The buyer could even use currency in a noncurrency transaction. But, as in Williamson and Wright (2010) and Williamson (2012), there is a banking arrangement that arises endogenously to efficiently allocate liquid assets to the appropriate transactions. This banking arrangement provides insurance, along the lines of what is captured in Diamond and Dybvig (1983).…”

Section: Banksmentioning

confidence: 99%

“…The basic structure of the model comes from Lagos and Wright (2005) and Rocheteau and Wright (2005), with details of the coexistence of money, credit, and banking from Sanches and Williamson (2010), Williamson and Wright (2010), and Williamson (2012). In the model, there is a fundamental role for exchange using government-supplied currency, and exchange with secured credit, as the result of limited commitment and limited recordkeeping/memory.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Scarce Collateral, the Term Premium, and Quantitative Easing

Williamson

2014

SSRN Journal

Self Cite

View full text Add to dashboard Cite

A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium-an upward-sloping nominal yield curve. Purchases of long-maturity government debt by the central bank are always a good idea, but for unconventional reasons. A floor system is preferred to a channel system, as a floor system permits welfare-improving asset purchases by the central bank.

show abstract

Section: Banksmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Scarce Collateral, the Term Premium, and Quantitative Easing

Williamson

2014

SSRN Journal

Self Cite

View full text Add to dashboard Cite

show abstract

“…We follow Lucas (1982), Lucas and Stokey (1987), and Svensson (1985) in modeling the need for money through a cash-in-advance (CIA) constraint. The "new monetarist perspective" (Williamson and Wright, 2010) instead introduces asymmetric information, limited commitment, and lack of double coincidence of wants to create a problem which money alleviates. 2 Agrawal (2018) provides a model of a demonetization episode in this tradition.…”

Section: Introductionmentioning

confidence: 99%

Cash and the Economy: Evidence from India's Demonetization

Chodorow-Reich

Gopinath

Mishra

et al. 2018

View full text Add to dashboard Cite

We analyze a unique episode in the history of monetary economics, the 2016 Indian "demonetization." This policy made 86% of cash in circulation illegal tender overnight, with new notes gradually introduced over the next several months. We present a model of demonetization where agents hold cash both to satisfy a cash-in-advance constraint and for tax evasion purposes. We test the predictions of the model in the cross-section of Indian districts using several novel data sets including: the geographic distribution of demonetized and new notes for causal inference; nightlight activity and employment surveys to measure economic activity including in the informal sector; debit/credit cards and e-wallet transactions data; and banking data on deposit and credit growth. Districts experiencing more severe demonetization had relative reductions in economic activity, faster adoption of alternative payment technologies, and lower bank credit growth. The cross-sectional responses cumulate to a contraction in employment and nightlights-based output due to demonetization of 2 p.p. and of bank credit of 2 p.p. in 2016Q4 relative to their counterfactual paths, effects which dissipate over the next few months. These cumulated effects provide a lower bound for the aggregate effects of demonetization. Our analysis rejects money non-neutrality using a large scale natural experiment, something that is yet rare in the vast literature on the effects of monetary policy.

show abstract

“…Their estimates are multiple times larger than those of standard reduced-form monetary models, up to 5 percent of GDP. This result led Williamson and Wright (2010) in their review article on New Monetarist Economics to conclude that "the intertemporal distortion induced by in ‡ation may be more costly than many economists used to think. "…”

Section: Introductionmentioning

confidence: 99%

The cost of inflation: A mechanism design approach

Rocheteau

2012

Journal of Economic Theory

View full text Add to dashboard Cite

The Cost of Infl ation: A Mechanism Design Approach Guillaume Rocheteau I apply mechanism design to quantify the cost of infl ation that can be attributed to monetary frictions alone. In an environment with pairwise meetings, the money demand that is consistent with a constrained-effi cient allocation takes the form of a continuous correspondence that can fi t the data over the period 1900-2006. For such parameterizations, the cost of moderate infl ation is zero. This result is robust to different assumptions regarding the observability of money holdings, the introduction of match-specifi c heterogeneity, and endogeneous participation decisions.

show abstract

New Monetarist Economics: Methods

Cited by 17 publications

References 93 publications

Scarce Collateral, the Term Premium, and Quantitative Easing

Scarce Collateral, the Term Premium, and Quantitative Easing

Cash and the Economy: Evidence from India's Demonetization

The cost of inflation: A mechanism design approach

Contact Info

Product

Resources

About