NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Quantitative Analytics of the Basic Neomonetarist Model

Miles S. Kimball

NBER Working Paper No. 5046 (Also Reprint No. r2038)
Issued in February 1995
NBER Program(s):   EFG   ME

This paper constructs a dynamic macroeconomic model with less- than-perfect price flexibility which has a real side consistent with Real Business Cycle Theory, augmented by investment adjustment costs, increasing returns to scale, and a new, flexible formalization of imperfect competition. A new mode of approximation is developed├żuseful for any model in which one state variable adjusts quickly, while another state variable adjusts slowly. Even with investment adjustment costs, monetary expansions are found to raise the real interest rate. The determinants of real rigidity and the macroeconomic rate of price adjustment are investigated.

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Document Object Identifier (DOI): 10.3386/w5046

Published:

  • Journal of Money, Credit and Banking, vol. 27, no. 4, part 2, pp. 1241-1289, November 1995 ,
  • Miles S. Kimball & Michael Woodford, 1994. "The quantitative analysis of the basic neomonetarist model," Proceedings, Federal Reserve Bank of Cleveland, pages 1241-1289.

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