Financial Innovations, Money Demand and the Welfare Cost of Inflation
Project funded by own resources
Project title Financial Innovations, Money Demand and the Welfare Cost of Inflation
Principal Investigator(s) Berentsen, Aleksander
Project Members Huber, Samuel
Marchesiani, Alessandro
Organisation / Research unit Departement Wirtschaftswissenschaften / Wirtschaftstheorie (Berentsen)
Project Website https://ideas.repec.org/p/zur/econwp/136.html
Project start 01.12.2013
Probable end 31.12.2027
Status Active
Abstract

In the 1990s, the empirical relation between money demand and interest rates began to fall apart. We analyze to what extent improved access to money markets can explain this break-down. For this purpose, we construct a microfounded monetary model with a money market, which provides insurance against liquidity shocks by offering short-term loans and by paying interest on money market deposits. We calibrate the model to U.S. data and find that improved access to money markets can explain the behavior of money demand very well. Furthermore, we show that, by allocating money more efficiently, better access to money markets decrease the welfare cost of inflation substantially.

Financed by University funds

Published results ()

  ID Autor(en) Titel ISSN / ISBN Erschienen in Art der Publikation
3322155  Berentsen, Aleksander; Huber, Samuel; Marchesiani, Alessandro  Financial Innovations, Money Demand, and the Welfare Cost of Inflation  1538-4616  Journal of Money, Credit and Banking  Publication: JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift) 

Cooperations ()

  ID Kreditinhaber Kooperationspartner Institution Laufzeit - von Laufzeit - bis
2740247  Berentsen, Aleksander  Huber, Samuel  University of Basel  01.12.2013  31.12.2015 
2740251  Berentsen, Aleksander  Marchesiani, Alessandro  University of Minho  01.12.2013  31.12.2015 
   

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