Optimal Fiscal and Monetary Policy in Customer Markets
Federal Reserve Board; Boston College and Toulouse School of Economics; Boston College and Kiel Institute; Universidad de los Andes
Cash-good/credit-good economy with customer markets requiring search and matching, advertising by firms to attract customers, Nash bargaining for customer market prices, Rotemberg sticky prices for intermediate goods, and a complete set of fisc
intermediate firms: monopolistic competition with Rotemberg price adjustment costs; Walrasian final goods: perfect competition with Dixit-Stiglitz bundling; customer market firms: search and matching with advertising costs and Nash bargaining
Table 5 p.18
Ramsey with flexible prices and complete taxes; volatility of inflation reported as coefficient of variation relative to GDP