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Author De-Blas-Pérez, Beatriz
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract This paper studies the performance of monetary policy rules in economies with and without credit market imperfections. The effects of endogenously driven monetary policy versus a constant money growth rule are investigated in a limited participation framework. The imperfections arise due to asymmetric information emerging in the production of capital. It is obtained that the economy fits US data reasonably well. In particular, the setup with credit market imperfections is able to account for some stylized facts of the business cycle absent in the standard frictionless case. This makes it a good candidate to analyze the effects of monetary policy. Regarding the stabilization of shocks, the use of interest rate rules in a limited participation model has the opposite effects compared with new Keynesian models. Finally, the effects of a Taylor rule are stronger, either stabilizing or destabilizing, when there are …nancial frictions in the economy.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 2001-01-01