Monetary policy and the transaction role of money in the US

• Autores: Alexander Kriwoluzky, Christian A. Stoltenberg
• Localización: Economic journal, ISSN 0013-0133, Vol. 125, Nº 587, 2015, págs. 1452-1473
• Idioma: inglés
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• Resumen

  • The declining importance of money in transactions can explain the well-known fact that US interest rate policy was passive in the pre-Volcker period and active after 1982. We generalise a standard cashless new Keynesian model (Woodford, 2003) by incorporating an explicit transaction role for money. In the pre-Volcker period, we estimate that money did play an important role and determinacy required a passive interest rate policy. However, after 1982, money no longer played an important role in facilitating transactions. Correspondingly, the conventional view prevails and an active policy ensured equilibrium determinacy