Pledgability and Liquidity: A New Monetarist Model of Financial and Macroeconomic Activity
New York University Stern School of Business; University of Wisconsin-Madison, FRB Minneapolis, FRB Chicago, and NBER
New Monetarist model with pledgability constraints on assets (bonds, housing, capital, money) serving as collateral to secure credit in a decentralized market (KM) alongside a frictionless centralized market (AD). Incorporates limited commitmen
CRS production function f(k,l) with capital and labor; competitive home builders with convex cost function for housing production
Section V.B, p.256
Friedman rule (i=0) benchmark; zero lower bound on nominal interest rate