Arbeitspapier

Financial innovations, money demand, and the welfare cost of inflation

In the 1990s, the empirical relation between money demand and interest rates began to fall apart. We analyze to what extent improved access to money markets can explain this break-down. For this purpose, we construct a microfounded monetary model with a money market, which provides insurance against liquidity shocks by offering short-term loans and by paying interest on money market deposits. We calibrate the model to U.S. data and find that improved access to money markets can explain the behavior of money demand very well. Furthermore, we show that, by allocating money more efficiently, better access to money markets decrease the welfare cost of inflation substantially.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 136

Klassifikation
Wirtschaft
Monetary Policy
Central Banks and Their Policies
Monetary Policy, Central Banking, and the Supply of Money and Credit: Other
Thema
Monetary Economics

Ereignis
Geistige Schöpfung
(wer)
Berentsen, Aleksander
Huber, Samuel
Marchesiani, Alessandro
Ereignis
Veröffentlichung
(wer)
University of Zurich, Department of Economics
(wo)
Zurich
(wann)
2014

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Berentsen, Aleksander
  • Huber, Samuel
  • Marchesiani, Alessandro
  • University of Zurich, Department of Economics

Entstanden

  • 2014

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