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| Author: | Chen, S-S. |
| Title: | The liquidity effect in a flexible-price monetary model |
| Journal: | Oxford Economic Papers
2008 : JAN, VOL. 60:1, p. 122-142 |
| Index terms: | monetary policy macroeconomics interest rates inflation central banks equilibrium analysis models |
| Language: | eng |
| Abstract: | This paper explores the impact of macroeconomic policy shocks in a flexible-price dynamic stochastic general equilibrium (DSGE) model with money. Monetary policy is modelled as a central bank using a simple interest rate rule (that is, Taylor rule). This model is found to account for liquidity effects, generate higher persistence in output and inflation, and capture the positive unconditional cross-correlations relating inflation and output. |
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