NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Monetary Equilibrium Model with Transactions Costs

Julio J. Rotemberg

NBER Working Paper No. 978
Issued in September 1982
NBER Program(s):   EFG

This paper presents the competitive equilibrium of an economy in which people hold money for transactions purposes. It studies both the steady states which result from different rates of monetary expansion and the effects of such non-steady state events as an open market operation. Even though the model features no uncertainty and perfect foresight, open market operations affect aggregate output. In particular, a simultaneous increase in money and governmental holdings of capital temporarily raises aggregate capital and output while it lowers the real rate of interest on capital.

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Document Object Identifier (DOI): 10.3386/w0978

Published: Rotemberg, Julio J. "A Monetary Equilibrium Model with Transactions Costs." Journal of Political Economy, Vol. 92, No. 1, (February 1984), pp. 40-58 . citation courtesy of

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