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| Author: | Shi, S. |
| Title: | Stochastic relation between money and capital in an economy with spatially separated markets |
| Journal: | Review of Economic Dynamics
1998 : OCT, VOL. 1:4, p. 754-780 |
| Index terms: | ECONOMIC DYNAMICS CAPITAL MONEY |
| Language: | eng |
| Abstract: | This paper examines the stochastic relationship between money and capital in an economy with spatially separated markets. The new ingredient of the model is that trades between markets may be desirable but are eliminated by market separation. When this cross-market friction is operative, aggregate capital is negatively correlated with and only with contemporaneous money growth, given past capital stocks. When the cross-market friction is not operative, aggregate capital can be positively correlated with contemporaneous money growth. |
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