Nominal Prices and Interest Rates in General Equilibrium: Endowment Shocks
Article Abstract:
The effect of endowment stocks on nominal prices and interest rates is examined. A two-state rational- expectations representative-individual is utilized, with the assumption that variations in the real endowment, rather than in money stock, result in random variations in nominal prices and interest rates. Equilibrium is derived. Endowment shocks produce negative effects on price levels, with the size of the effect depending on the elasticity of the utility-of-money function. The effect of endowment shocks on nominal interest rates may be negative or positive depending on the elasticity of the utility-of- money function. The relation between nominal and real interest rates, using Fisher's Theory, is analyzed. Results of the research are related to several monetarist theories of economics.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1984
User Contributions:
Comment about this article or add new information about this topic:
Equilibrium in servicing industries: an economic application of queuing theory
Article Abstract:
The nature of equilibrium is examined for markets in which service and waiting play an important role. It is shown that all firms charge the same price if consumers do not know which firms are charging which prices. If firm prices are revealed by advertising, the market will separate, with consumers with a high cost of time making purchases from firms with high prices and short queues. Consumers with a low cost of time will buy from firms that have low prices and long queues. Firms will use advertising if they are allowed to, but they will benefit from a collusive agreement that restricts advertisement if the agreement is enforceable.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1988
User Contributions:
Comment about this article or add new information about this topic:
Nominal Prices and Interest Rates in General Equilibrium: Money Shocks
Article Abstract:
The effect of exogeneous fluctuations in the monetary growth rate on the inflation rate and nominal interest rate when money is non-interest bearing is examined. A representative individual is derived. Equilibrium expressions for prices and interest rates are established. Disadvantages and advantages of putting money in the utility function are discussed. Results reveal that the effects of monetary shocks on inflation and interest depend on the autocorrelation of the monetary growth rate.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1984
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Optimal sequencing and resource allocation in research and development projects. Resource allocation models with risk aversion and probabilistic dependence: offshore oil and gas bidding
- Abstracts: The interaction between price and long-run variables in a multinational brand market. Developing and validating a multidimensional consumer-based brand equity scale
- Abstracts: Comparing the calibration and coherence of numerical and verbal probability judgements. A Fuzzy Set Approach to Aggregating Internal Control Judgements
- Abstracts: Industry and regional patterns in sequential foreign market entry. Structure and Performance in International Technology Transfer
- Abstracts: Short Sales Restrictions and the Security Market Line. Intervalling effect on intertemporal stability among Asian emerging markets and developed markets