SLUGGISH RESPONSES OF PRICES AND INFLATION TO MONETARY SHOCKS IN AN INVENTORY MODEL OF MONEY DEMAND

• 成果类型: Article
• 署名作者: Alvarez, Fernando; Atkeson, Andrew; Edmond, Chris
• 署名单位: University of Chicago; National Bureau of Economic Research; University of California System; University of California Los Angeles; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; New York University; University of Melbourne
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1162/qjec.2009.124.3.911
• 发表日期: 2009
• 页码: 911-967
• 关键词: interest-rates; rational-expectations; transactions demand; exchange-rates; DYNAMICS; COSTS

摘要

We examine the responses of prices and inflation to monetary shocks in an inventory-theoretic model of money demand. We show that the price level responds sluggishly to an exogenous increase in the money stock because the dynamics of households' money inventories leads to a partially offsetting endogenous reduction in velocity. We also show that inflation responds sluggishly to an exogenous increase in the nominal interest rate because changes in monetary policy affect the real interest rate. In a quantitative example, we show that this nominal sluggishness is substantial and persistent if inventories in the model are calibrated to match U. S. households' holdings of M2.