The tug-o-war for supremacy between inflation targeting and monetary tar-geting is a classic yet timely topic in monetary economics. In this paper, werevisit this question within the context of a pure-exchange overlapping genera-tions model of money where spatial separation and random relocation...

In this paper, we argue that the observed di¤erence in the cost of intraday and overnightliquidity is part of an optimal payments system design. In our environment, the interestcharged on overnight liquidity a¤ects output while the cost of intraday liquidity onlyaffects the distribution of...

Faced with real and nominal shocks, what should a benevolent central bankdo, …x the money growth rate or target the inflation rate? In this paper, wemake a …rst attempt at studying the optimal choice of monetary policy in-struments in a micro-founded model of money. Speci…cally, we produce...

This paper investigates the role of trade credit in the transmissionof monetary policy. Most models of the transmission mechanism allowthe firm to access only financial markets or bank lending according tosome net worth criterion. In our model we introduce trade creditas an additional source of...

We study a variant of the conventional keeping-up-with-the-Joneses setup in whichheterogeneous-ability agents care both about consumption and leisure and receive anutility premium if their consumption exceeds that of the Joneses’. Unlike the conventionalsetup in which all agents are assumed to...

This paper examines the impact of monetary policy on UK firms’ access to bank and market finance whenallowance is made for differences in firm-specific characteristics. A theoretical model determines the cut-off valuesfor project profitability that would allow firms to access bank or market...