SEARCH, LIMITED PARTICIPATION, AND MONETARY POLICY†

  1. Stephen D. Williamson‡

Article first published online: 23 JAN 2006

DOI: 10.1111/j.1468-2354.2006.00374.x

Issue

International Economic Review

International Economic Review

Volume 47, Issue 1, pages 107–128, February 2006

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How to Cite

Williamson, S. D. (2006), SEARCH, LIMITED PARTICIPATION, AND MONETARY POLICY. International Economic Review, 47: 107–128. doi: 10.1111/j.1468-2354.2006.00374.x

Author Information

  1. Department of Economics, University of Iowa, U.S.A.

Publication History

  1. Issue published online: 23 JAN 2006
  2. Article first published online: 23 JAN 2006

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A model is developed that employs recent developments in the literature on search models of money to capture the distributional effects of monetary policy in a tractable way. Deterministic and stochastic versions of the model are studied. Money is not neutral, and these nonneutralities persist, whether or not the change in the money supply is anticipated or unanticipated. At the optimum, monetary policy is geared to correcting distortions in the search sector of the economy, while correcting for the persistent effects of past monetary policy actions.

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