Sticky Prices and Costly Credit∗
نویسندگان
چکیده
This paper has two related goals: (i) construct a model where money and credit coexist; (ii) pursue in this setting a theory of endogenous sticky prices that can be taken to the data. Search frictions generate price dispersion, and lead to monetary equilibria where profit-maximizing sellers set nominal prices they sometimes keep fixed when aggregate conditions change. Buyers can use cash or credit, where the former (latter) is subject to inflation (fixed costs), and hence is better for low (high) price transactions. This avoids technical problems in previous models. Calibrated versions match price-change data well. Yet policy implications differ markedly from exogenous sticky-price models. JEL classification nos: E31, E51, E52, E42
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