RT Generic
T1 The role of search frictions for output and inflation dynamics: a Bayesian assessment
A1 Menner, Martin
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB Search frictions in the goods market have proven to be a fruitful deviation from the fiction of a centralized Walrasian market providing a micro-foundation of the use of money as a medium of exchange. Moreover, persistent propagation of monetary shocks can arise in search-theoretic monetary models through the interaction of search-frictions in the goods and labor markets, andinventory holdings.Here, a search-theoretic monetary DSGE model with capital and inventory investment isestimated, and its implications on output and inflation dynamics are contrasted with those of standard flexible price monetary models: a cash-in-advance and a portfolio adjustment cost model. Model estimation and comparison is conducted in a Bayesian way in order to account for possible model misspecification.The search model can track inflation and output data better, as well as it dominates the other models in the ability to predict the autocorrelations of inflation and the persistent disinflation process after a technology shock. It generates a hump-shaped but not strong enough output response to a monetary shock. Current and near current correlations between output growthinflation are predicted well.
SN 2340-5031
YR 2007
FD 2007-09
LK https://hdl.handle.net/10016/939
UL https://hdl.handle.net/10016/939
LA eng
LA eng
DS e-Archivo
RD 19 may. 2024