Short-run and long-run effects of changes in money in a random-matching model

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Abstract

A random-matching model of money is used to deduce the effects of a once-for-all change in the quantity of money. It is shown that the change has short-run effects that are predominantly real and long-run effects that are in the direction of being predominantly nominal provided that the change is random and people learn its realization only with a lag. The change in the quantity of money comes about through a random process of discovery that does not permit anyone to deduce the aggregate amount discovered when the change actually occurs.

Original languageEnglish (US)
Pages (from-to)1293-1307
Number of pages15
JournalJournal of Political Economy
Volume105
Issue number6
DOIs
StatePublished - Dec 1997

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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