Working Paper: NBER ID: w7425
Authors: Brett Katzman; John Kennan; Neil Wallace
Abstract: The effects on ex ante optima of a lag in seeing monetary realizations are studied using a matching model of money. The main new ingredient in the model is meetings in which producers have more information than consumers. A consequence is that increases in the amount of money that occur with small enough probability can have negative impact effects on output, because it is optimal to shut down trade in such low probability meetings rather than have lower output when high probability realizations occur. The information lag also produces prices that do not respond much to current monetary realizations.
Keywords: No keywords provided
JEL Codes: E30; E40; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in the amount of money (E51) | negative impact effects on output (F69) |
| uninformed agents (D82) | price level stickiness (E31) |
| current and previous monetary realizations (E39) | total output and price level (E30) |
| meetings between informed consumers and uninformed producers (D83) | positive impact effects on output (F69) |
| meetings between informed producers and uninformed consumers (D83) | no trade and negative impact effects (F69) |
| low probability low monetary realization (D80) | optimal mechanism does not have no trade (F11) |