The short-run non-neutrality of money and its implications for inflation dynamics are examined in a monetary search economy with heterogeneous agents. Lump-sum money injections affect the distribution of money holdings in equilibrium and thus generate short-run non-neutrality. The response of...

Inflation, Employment and Interest Rates in an Economy with Endogenous Market Segmentation Aubhik Khan, Federal Reserve Bank of Philadelphia Julia K. Thomas, University of Minnesota We examine a monetary economy where households incur fixed transactions costs when exchanging bonds and money and,...