International Welfare Effects of Monetary Policy

Monetary Policy, Price Dynamics, and Welfare∗

We present a micro-founded search-theoretical model of money in which agents are subject to idiosyncratic liquidity shocks as well as aggregate productivity and monetary shocks. Monetary policy has redistributive effects and persistent effects on output and prices: aggregate shocks will propagate and diffuse gradually as the money distribution adjusts over time. The model is used to study the c...

International Aspects of Current Monetary Policy

Growth and Welfare Effects of Monetary Volatility

This paper uses a continuous-time, stochastic, dynamic general equilibrium model to provide estimates of the growth and welfare effects of monetary volatility. Its primary concern is to highlight the long-run consequences of different monetary environments in a small open economy. Using UK-relevant data to set key parameter values in the model, we carry out three policy experiments. We find tha...

International Great Inflation and Common Monetary Policy∗

The Great Inflation of the 1970s was an international phenomenon. We study whether monetary authorities in the G7 countries were changing their responses to inflation in a similar manner during and following the Great Inflation era. Our results suggest that the common to the G7 countries inflation pattern during the Great Inflation period is associated with a common pattern in the monetary poli...

Changing Effects of Monetary Policy

A series of developments in the U.S. economic environment in the 1980s has resulted in major changes in prevalent thinking about how monetary policy affects economic activity. One important part of this change simply reflects the heightened awareness, following the experience of disinflation early in the decade, that monetary policy is not neutral-that is,,that actions taken by h e central bank...