Optimal Monetary Policy
Federal Reserve Bank of Philadelphia; Boston University, Federal Reserve Bank of Richmond and NBER; Federal Reserve Bank of Richmond
New Keynesian DSGE model with Calvo-style staggered price setting, monopolistic competition among intermediate goods producers, and transactions costs for converting wealth into consumption (money economizes on credit costs). Households face ti
intermediate goods producers: monopolistic competition with staggered price adjustment (Calvo-style with time-varying hazard); retailers: perfect competition with CES aggregation
Table 5 Panel A p.848
Short-sample money demand, wedge of monetary inefficiency eliminated