MONEY,SEARCH, AND BUSINESS CYCLES*

Monetary models that specify explicit frictions to generate money demand have been developed over the last 20 years and have been used to address many questions. In this article, I investigate the short‐run properties of a particular model considering a number of versions based on some modeling choices. All versions feature flexible prices. I find that in many aspects, both real and nominal, the model resembles other, more reduced‐form models. Some variations of the model come closer to matching some key nominal facts than a reduced‐form model. The model also generates counter cyclical markups, in line with the data.     

THE DISTRIBUTION OF MONEY BALANCES AND THE NONNEUTRALITY OF MONEY*

Recent monetary models with explicit microfoundations are made tractable by assuming that agents have access to centralized markets after one round of decentralized trade. Given quasi‐linear preferences, this makes the distribution of money degenerate—which keeps the models simple but precludes the discussion of distributional effects of monetary policy. We generalize these models by assuming two rounds of trade before agents can readjust their money holdings to study a range of new distributional effects analytically. We show that unexpected, symmetric lump‐sum money injections may increase short‐run output and welfare, whereas asymmetric injections may increase long‐run output and welfare.     

POLITICAL CYCLES

A model of elections is put forth in which there are two parties, each representing a different constituency of voters (the poor and the rich). The political issue is the choice of a proportional tax rate on income, revenues from which are used to finance a public good. There is a stochastic element in which party wins the elections, due to party uncertainty concerning voter preferences, or due to uncertainty concerning which voters will show up at the polls. A political equilibrium in one period consists in a tax policy put forth by each party, and a probability that each party wins. A long series of elections is simulated (100 periods). Voter preferences for the public good change adversely as a function of length of time the incumbent party has been in power and the level of the public good in the last period. Thus, if the party in power funds high levels of the public good, preferences start to move against the public good. This model generates dramatic political cycles, and it is argued that these cycles are of fundamentally different origin from that discussed in the realignment literature.     

MONEY IS PRIVACY*

An extensive literature in monetary theory has emphasized the role of money as a record‐keeping device. Money assumes this role in situations where using credit would be too costly, and some might argue that this role will diminish as the cost of information and thus the cost of credit‐based transactions continues to fall. In this article we investigate another use for money, the provision of privacy. That is, a money purchase does not identify the purchaser, whereas a credit purchase does. In a simple trading economy with moral hazard, we compare the efficiency of money and credit, and find that money may be useful even when information is free.     

货币需求弹性、有效货币供给与货币市场非均衡模型——解析“中国之谜”与长期流动性过剩

中国的流动性过剩相对于其他经济发达国家更为严重,不但是由于产业结构升级和对外开放度上升而导致的过度货币需求,而且是因为不良贷款引发的货币供给有效性减弱。缓解流动性过剩必须从经济转型时期的货币需求弹性、有效货币供给以及货币市场非均衡等多个方面寻找对策。     

PRIVATE VERSUS PUBLIC MONEY*

I show that the nature of agents' production determines whether they should issue money. I use a matching model with no commitment and no enforcement. Some agents can produce goods, whereas others are unproductive. All agents can produce at a cost a distinguishable, intrinsically useless but durable good: notes. Productive agents produce red notes whereas unproductive agents produce green notes. I find that green notes are the most efficient means of exchange, as they implement more allocations than red notes and at a lower cost. Therefore, unproductive agents should issue money. I associate unproductive agents to agents producing public goods.     

ELECTORAL CYCLES THROUGH LOBBYING

In this paper, we build a framework where the interplay between the lobby power of special interest groups and the voting power of the majority of the population leads to political business cycles. We apply our setup to explain electoral cycles in government expenditure composition, aggregate expenditures, and real exchange rates.     

CREDIT CYCLES REDUX*

Theoretical studies have shown that under unorthodox assumptions on preferences and production technologies, collateral constraints can act as a powerful amplification and propagation mechanism of exogenous shocks. We investigate whether or not this result holds under more standard assumptions. We find that collateral constraints typically generate small output amplification. Large amplification is obtained as a “knife‐edge” type of result.     

中国货币需求的稳定性

在中国改革开放的初期,由金融创新而导致的新型替代资产较少,金融资产结构较为单一,金融创新对经济的冲击效应往往不很显著。但是,随着改革的推进,当改革达到较高的程度后,制度因素虽然仍会起作用,但其效应有可能减弱,一般趋势性因素的冲击效应有可能增强。我国加入世界贸易组织后,随着外资银行的进入,金融业竞争的加剧,以及利率市场化的实质性推进,我国金融创新的步伐和水平明显提高,金融创新作为一种趋势性因素将成为货币需求不稳定性研究的重要内容。     

ENDOGENOUS GROWTH CYCLES*

Current explanations for why a growing economy necessarily goes through periods of high and low growth predict countercyclical R&D investment. As this is very controversial from an empirical perspective, a stochastic Poisson model of endogenous growth cycles is presented where the determinants of the cyclical behavior of R&D investment are analytically studied. Providing an explicit expression for the expected length of a cycle shows that high‐frequency fluctuations can indeed be understood by this approach. It is also shown how small technological improvements translate into large aggregate fluctuations.     

CONTINGENT PRICES AND MONEY*

Price posting with directed search is a widely used trading mechanism. Coles and Eeckhout showed that if sellers are allowed to post prices contingent on realized demand instead of one price, then there is real market indeterminacy. In this article, we fit this contingent price‐posting protocol into a monetary economy. We show that, as long as holding money is costly, there exists a unique equilibrium rather than a continuum. In this equilibrium sellers post a low price for when the buyer is alone, a high price for when several buyers show up, and buyers randomize between sellers and money holdings.     

中国货币市场:结构视角的经济分析

经济体制改革以来中国货币市场经历了从分散无序到统一规范,再到创新与高速增长继而回归平稳等多个发展阶段,初步构建了一个多元化子市场体系。从不同维度的市场构成变迁看,中国货币市场在产品发行和交易结构失衡且不平稳的背景下,存在交易过度集中化、资金流向结构单一等问题,颇具中国特色。体制转型及特有的信贷管理体制等多重制度约束下的市场功能定位的异化及阶段性转变是导致其结构变迁最为重要的原因。改善子市场体系构成的同时适度打通货币市场与资本市场间的资金连通渠道是促进中国货币市场发展的应有之义。     

SOFT MONEY AND CAMPAIGN FINANCE REFORM

We analyze special interest influence on policy when political contributions are capped but the regulation contains soft‐money loopholes. The politician chooses between two policy options. We define special interest influence as the probability the politician chooses the policy he would not have chosen in the absence of contributions. Any binding cap reduces special interest influence but the effect may be nonmonotonic. A ban on contributions can result in greater special interest influence than a binding but nonzero cap. The results may also have implications for the policy response to the 2010 Supreme Court ruling on Citizens United v. FEC.     

CAUSALITY IN POLITICAL BUSINESS CYCLES

One can easily identify four general models of political business cycles: office-motivated models (both forward and backward looking) and partisan models (again, both forward and backward looking). Each model makes different assumptions about the direction and timing of causal links between the economy and polity. This paper uses Granger causality tests to investigate the causal links between presidential popularity and different measures of aggregate economic performance and aggregate economic policy. The paper's aim is to investigate whether any existing theories receive substantive support and, if not, to suggest the properties that any new theories should display. The results indicate no overwhelming support for any existing theories, though partisan models receive more support than do office-motivated models. The data appear to be most consistent with Ellis and Thoma's reputational partisan model.