A supply side limited participation model of monetary transmission mechanism
Author
Karaca, Zeynal
Advisor
Başçı, Erdem
Date
2001Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
87
views
views
37
downloads
downloads
Abstract
This thesis is a theoretical investigation of how money growth affects output,
employment, consumption and real wages from a supply side channel. We analyze the
effects of monetary shocks under deterministic and stochastic environments in a limited
participation model with competitive and sticky wages. We find that anticipated money
growth decreases output, employment, consumption, working capital and real wages,
but increases profitability of the firms. Unanticipated money growth under sticky wages
increases employment, output and consumption, decreases price and profits. The main
contribution of this thesis to the literature is that when sticky nominal wages are included
in a limited participation model with inelastic labor supply stylized business
cycle facts can be obtained