New Monetarist Economics

Williamson, Stephen D.; Wright, Randall

doi:10.1016/b978-0-444-53238-1.00002-8

Cited by 102 publications

(46 citation statements)

References 152 publications

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“…The conditions under which gift and monetary exchange systems can be rationalized as equilibrium outcomes have recently become the subject of a large theoretical literature in modern monetary economics employing microfounded search-theoretic models (see Lagos, Rocheteau, & Wright, 2014;Nosal &Rocheteau, 2011 andWilliamson &Wright, 2011 for surveys). These models make clear the frictions and assumptions under which gift exchange and monetary exchange systems can be rationalized as an equilibrium phenomenon.…”

Section: Introductionmentioning

confidence: 99%

Experimental Evidence on the Essentiality and Neutrality of Money in a Search Model

Duffy¹,

Puzzello²

2014

Research in Experimental Economics

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We study a microfounded search model of exchange in the laboratory. Using a within-subjects design, we consider exchange behavior with and without an intrinsically worthless token object. While these tokens have no redemption value, like fiat money they may foster greater exchange and welfare via the coordinating role of having prices of goods in terms of tokens. We find that welfare is indeed improved by the presence of tokens provided that the economy starts out with a supply of such tokens. In economies that operate for some time without tokens, the later surprise introduction of tokens does not serve to improve welfare. We also explore the impact of announced changes in the economy-wide stock of tokens (fiat money) on prices. Consistent with the quantity theory of money, we find that increases in the stock of money (tokens) have no real effects and mainly result in proportionate changes to prices.

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Section: Introductionmentioning

confidence: 99%

Experimental Evidence on the Essentiality and Neutrality of Money in a Search Model

Duffy¹,

Puzzello²

2014

Research in Experimental Economics

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“…Comparing (D11) and (D12) shows that f c > f c because f d < f d and < 1. Given f c > f c , (D10) and (30) imply that h < h . Rewriting (D2) yields…”

Section: Appendix C: Dynamic Properties Of the Search Modelmentioning

confidence: 99%

“…To highlight the novelty of this study, it is helpful to …rst discuss two related branches of literature in monetary economics. First, this study relates to the search-andmatching literature on money and capital formation; see for example, Shi (1999), Menner (2006), Williamson and Wright (2010), Aruoba et al (2011), Bencivenga and Camera (2011) and Waller (2011). This branch of literature analyzes the relationship between money and capital formation in a search-theoretic framework without considering economic growth as an endogenous process.…”

Section: Introductionmentioning

confidence: 99%

Money, random matching and endogenous growth: A quantitative analysis

Chu

Kan

Lai

et al. 2014

Journal of Economic Dynamics and Control

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In this study, we develop a search-and-matching monetary growth model to analyze the e¤ects of in ‡ation on economic growth and social welfare by introducing endogenous economic growth via capital externality into a two-sector search-and-matching model. We …nd that the channel through which in ‡ation a¤ects economic growth in the search-and-matching model is di¤erent from the traditional cash-in-advance model. To facilitate the calibration, we obtain an empirical estimate of the e¤ects of in ‡ation on economic growth using panel regressions. In the simulation analysis, we quantitatively evaluate the welfare e¤ect of in ‡ation in the search-and-matching endogenous growth model and compare it to a search-and-matching exogenous growth model. We …nd that the welfare e¤ect of in ‡ation is nonlinear in the endogenous growth model whereas it is linear in the exogenous growth model. Furthermore, we …nd that the welfare cost of in ‡ation under endogenous growth is up to four times as large as the welfare cost of in ‡ation under exogenous growth.JEL classi…cation: E41, O41, O42.

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“…There are at least two interpretations. One is that  insists on quid pro quo,  is holding transferable assets worth , and he cannot hand over more than he has (as in many monetary models; see Williamson and Wright 2010 for a survey). Another is that  can secure a loan from  -trade credit -to be paid off in the next centralized market, but only up to the value  of his assets that he can pledge as collateral (as in many imperfect credit models; see Gertler and Kiyotaki 2010 for a survey).…”

Section: Technology Transfer With Imperfect Creditmentioning

confidence: 99%

Innovation and Growth with Financial, and other, Frictions

Chiu

Meh

Wright

2011

Self Cite

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AcknowledgementsWe thank many friends and colleagues for comments on earlier work on this and related projects. Wright thanks the Bank of Canada for their hospitality, as well as the NSF and the Ray Zemon Chair in Liquid Assets at the Wisconsin School of Business for support.iii AbstractThe generation and implementation of ideas, or knowledge, is crucial for economic performance. We study this process in a model of endogenous growth with frictions. Productivity increases with knowledge, which advances via innovation, and with the exchange of ideas from those who generate them to those best able to implement them (technology transfer). But frictions in this market, including search, bargaining, and commitment problems, impede exchange and thus slow growth. We characterize optimal policies to subsidize research and trade in ideas, given both knowledge and search externalities. We discuss the roles of liquidity and financial institutions, and show two ways in which intermediation can enhance efficiency and innovation. First, intermediation allows us to finance more transactions with fewer assets. Second, it ameliorates certain bargaining problems, by allowing entrepreneurs to undo otherwise sunk investments in liquidity. We also discuss some evidence, suggesting that technology transfer is a significant source of innovation and showing how it is affected by credit considerations.

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New Monetarist Economics

Cited by 102 publications

References 152 publications

Experimental Evidence on the Essentiality and Neutrality of Money in a Search Model

Experimental Evidence on the Essentiality and Neutrality of Money in a Search Model

Money, random matching and endogenous growth: A quantitative analysis

Innovation and Growth with Financial, and other, Frictions

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