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OPTIMAL STABILIZATION POLICY WITH SEARCH EXTERNALITIES
| Content Provider | Scilit |
|---|---|
| Author | Berentsen, Aleksander Waller, Christopher |
| Copyright Year | 2013 |
| Description | We study optimal monetary stabilization policy in a DSGE model with microfounded money demand. A search externality creates “congestion,” which causes aggregate output to be inefficient. Because of the informational frictions that give rise to money, households are unable to insure themselves perfectly against aggregate shocks. This gives rise to a welfare-improving role for monetary policy that works by adjusting the nominal interest rate in response to these shocks. Optimal policy is determined by choosing a set of state-contingent nominal interest rates to maximize the expected lifetime utility of the agents subject to the constraints of being an equilibrium. |
| Related Links | http://doc.rero.ch/record/294440/files/S1365100513000564.pdf https://www.cambridge.org/core/services/aop-cambridge-core/content/view/D36ACA567A12F250DC65B9A8A95693F8/S1365100513000564a.pdf/div-class-title-optimal-stabilization-policy-with-search-externalities-div.pdf |
| Ending Page | 700 |
| Page Count | 32 |
| Starting Page | 669 |
| ISSN | 13651005 |
| e-ISSN | 14698056 |
| DOI | 10.1017/s1365100513000564 |
| Journal | Macroeconomic Dynamics |
| Issue Number | 3 |
| Volume Number | 19 |
| Language | English |
| Publisher | Cambridge University Press (CUP) |
| Publisher Date | 2015-04-01 |
| Access Restriction | Open |
| Subject Keyword | Macroeconomic Dynamics Mathematical Social Sciences Monetary Policy Optimal Stabilization Policy Search Equilibrium Microfoundation of Money |
| Content Type | Text |
| Resource Type | Article |
| Subject | Economics and Econometrics |
