Heterogeneous consumers, segmented asset markets, and the effects of monetary policy

Arbeitspapier

This paper examines the implications of segmented assets markets for the real and nominal effects of monetary policy. I develop a model, in which varieties of consumption bundles are purchased sequentially. Newly injected money thus disseminates slowly through the economy via second-round effects and induces a non-degenerate, long-lasting heterogeneity in wealth. As a result, the effective elasticity of substitution differs across households, affecting optimal markups chosen by producers. In line with empirical evidence, the model predicts a short-term inflation-output trade-off, a liquidity effect, countercyclical markups, and procyclical profits and wages after monetary shocks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bonn Econ Discussion Papers ; No. 08/2010

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Money Supply; Credit; Money Multipliers
• Subject: Segmented Asset Markets ; Monetary Policy ; Countercyclical Markups ; Liquidity Effect ; Limited Participation ; Geldpolitik ; Transmissionsmechanismus ; Agent-based Model ; Konsumentenverhalten ; Kapitalanlage ; Vermögenseffekt ; Extensives Spiel ; Mark-up Pricing ; Inflation ; Konjunktur ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Enders, Zeno
• Event: Veröffentlichung
• (who): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/38808
• Last update: 10.03.2025, 11:43 AM CET