Pain of Paying in a Business Cycle Model

29 Pages Posted: 2 Feb 2018 Last revised: 17 Dec 2021

See all articles by Baptiste Massenot

Baptiste Massenot

University of Toulouse - Toulouse Business School

Date Written: December 9, 2021

Abstract

This paper builds a business cycle model in which consumers experience a pain of paying and neglect the opportunity costs. The demand block is a linear function decreasing in the price and in the interest rate. The supply block is a Phillips curve. The model is simple, yields textbook predictions, and solves the New Keynesian puzzles.

Suggested Citation

Massenot, Baptiste, Pain of Paying in a Business Cycle Model (December 9, 2021). Available at SSRN: https://ssrn.com/abstract=3116623 or http://dx.doi.org/10.2139/ssrn.3116623

Baptiste Massenot (Contact Author)

University of Toulouse - Toulouse Business School ( email )

20, bd Lascrosses
BP 7010
Toulouse, 31068
France

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