Limited Participation, Capital Accumulation and Optimal Monetary Policy - Sciences Po Access content directly
Preprints, Working Papers, ... Year : 2018

Limited Participation, Capital Accumulation and Optimal Monetary Policy

Abstract

Motivated by recent empirical findings on money demand, the paper presents a general equilibrium model where agents have limited participation in financial markets and use money to smooth consumption. In such setup, investment is not optimal because only a fraction of households participate in financial markets in each period. Optimal monetary policy substantially increases welfare by changing investment decisions over the business cycle, but adverse redistributive effects limit the scope for an active monetary policy. Recent developments in the heterogeneous-agents literature are used to develop a tractable framework with aggregate shocks, where optimal monetary policy can be analyzed.
Fichier principal
Vignette du fichier
2018-ragot-limited-participation-capital-accumulation-and-optimal-monetary-policy.pdf (377.15 Ko) Télécharger le fichier
Origin : Publisher files allowed on an open archive

Dates and versions

hal-03444395 , version 1 (23-11-2021)

Identifiers

Cite

Xavier Ragot. Limited Participation, Capital Accumulation and Optimal Monetary Policy. 2018. ⟨hal-03444395⟩
33 View
17 Download

Share

Gmail Facebook X LinkedIn More