The Quantitative Analytics of the Basic Neomonetarist Model

46 Pages Posted: 12 Jun 2000 Last revised: 16 May 2022

See all articles by Miles S. Kimball

Miles S. Kimball

University of Colorado Boulder; University of Michigan at Ann Arbor - Department of Economics; Center for Economic and Social Research, USC; National Bureau of Economic Research (NBER)

Date Written: February 1995

Abstract

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 developedþuseful 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.

Suggested Citation

Kimball, Miles S., The Quantitative Analytics of the Basic Neomonetarist Model (February 1995). NBER Working Paper No. w5046, Available at SSRN: https://ssrn.com/abstract=225825

Miles S. Kimball (Contact Author)

University of Colorado Boulder ( email )

Campus Box 256
Boulder, CO 80309
United States
303.492.8295 (Phone)
303.492.8960 (Fax)

HOME PAGE: http://www.colorado.edu/Economics/people/faculty/kimball.html

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-764-2375 (Phone)
734-764-2769 (Fax)

Center for Economic and Social Research, USC ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States