Sticky Prices versus Monetary Frictions: An Estimation of Policy Trade-offs

• 成果类型: Article
• 署名作者: Aruoba, S. Boragan; Schorfheide, Frank
• 署名单位: University System of Maryland; University of Maryland College Park; University of Pennsylvania
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.3.1.60
• 发表日期: 2011
• 页码: 60-90
• 关键词: DSGE models; inflation; money; welfare; FRAMEWORK; exchange; beliefs

摘要

We develop a two-sector monetary model with a centralized and decentralized market. Activities in the centralized market resemble those in a standard New Keynesian economy with price rigidities. In the decentralized market agents engage in bilateral exchanges for which money is essential. This paper is the first to formally estimate such a model, evaluate its fit based on postwar US data, and assess its money demand properties. Steady-state welfare calculations reveal that the distortions created by the monetary friction may be of similar magnitude as the distortions created by the New Keynesian friction. (JEL C54, E12, E31, E41, E52)