Intertemporal Substitution and the Liquidity Effect in a Sticky Price Model.

The liquidity effect, defined as a decrease in nominal interest rates in response to a monetary expansion, is a major stylized fact of the business cycle. This paper seeks to understand under what conditions such an effect can be explained in a general equilibrium model with sticky prices and capital adjustment costs.

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Year of publication:	1999
Authors:	Andrés, Javier ; López-Salido, J. David ; Vallés, Javier
Institutions:	Banco de España
Subject:	BUSINESS CYCLES \| PRICES \| ECONOMIC MODELS \| GENERAL EQUILIBRIUM

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Series:	Banco de España Working Papers.
Type of publication:	Book / Working Paper
Notes:	38 pages
Classification:	E31 - Price Level; Inflation; Deflation ; E32 - Business Fluctuations; Cycles ; D50 - General Equilibrium and Disequilibrium. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005590719