Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-06T11:45:38.230Z Has data issue: false hasContentIssue false
  • English
  • Français

Real Propagation of Monetary Shocks:Dynamic Complementarities and Capital Utilization

Published online by Cambridge University Press:  01 September 1999

David Cook
David Cook
Affiliation:
Hong Kong University of Science & Technology
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper studies the dynamic propagation of a liquidity shock through two real propagation channels: dynamic complementarities and time-varying capital utilization. The findings for an economy with intertemporal externalities are: (1) An otherwise transient liquidity shock will have real effects on output for several years; (2) time-varying capital utilization strongly augments this propagation; (3) the real effects of monetary shocks last longer when external productivity depreciates faster; and (4) nominal prices respond more sluggishly to a change in the money supply when there is a strong real propagation channel.

Keywords

Liquidity EffectIntertemporal ExternalitiesPropagationCapital Utilization
Type
Research Article
Information
Macroeconomic Dynamics , Volume 3 , Issue 3 , September 1999 , pp. 368 - 383
Copyright
© 1999 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)