The Quantitative Analytics of the Basic Neomonetarist Model

46 Pages Posted: 12 Jun 2000

See all articles by Miles S. Kimball

Miles S. Kimball

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

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Center for Economic and Social Research, USC ( email )

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National Bureau of Economic Research (NBER)

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