Some Price Effects of Monetary Shocks in a Network Economy. Mandel, A., Taghawi, D., Vipin, -., & Veetil, P Working Paper SSRN 2882994, 2018. Paper abstract bibtex Empirical evidence shows monetary shocks have two temporary eects on the distribution of prices. One, the dispersion of cross-section of prices increases in response to monetary shocks. Two, some prices change in the 'wrong' direction: some prices decrease in response to positive monetary shocks, and increase in response to negative monetary shocks. We present a model that produces the two eects of monetary shocks on the distribution of prices. In our model, firms are related to each other through a production network. Monetary shocks change the working capital of a subset of firms and percolate to other firms through demand and supply linkages. Price dispersion increases because the percolation of a monetary shock through the production network causes prices to dierentially deviate from their steady state values. Some prices change in the wrong direction because a shift in one firm's demand generates a shift in another firm's supply (and vice-versa), thereby producing complicated chains of bi-directional price changes. JEL Classification C63, C67, D80, E31, E52.
@article{Mandel2018,
abstract = {Empirical evidence shows monetary shocks have two temporary eects on the distribution of prices. One, the dispersion of cross-section of prices increases in response to monetary shocks. Two, some prices change in the 'wrong' direction: some prices decrease in response to positive monetary shocks, and increase in response to negative monetary shocks. We present a model that produces the two eects of monetary shocks on the distribution of prices. In our model, firms are related to each other through a production network. Monetary shocks change the working capital of a subset of firms and percolate to other firms through demand and supply linkages. Price dispersion increases because the percolation of a monetary shock through the production network causes prices to dierentially deviate from their steady state values. Some prices change in the wrong direction because a shift in one firm's demand generates a shift in another firm's supply (and vice-versa), thereby producing complicated chains of bi-directional price changes. JEL Classification C63, C67, D80, E31, E52.},
author = {Mandel, Antoine and Taghawi, Davoud and Vipin, -Nejad and Veetil, P},
file = {::},
journal = {Working Paper SSRN 2882994},
keywords = {DOLFINS{\_}T1.3},
mendeley-tags = {DOLFINS{\_}T1.3},
title = {{Some Price Effects of Monetary Shocks in a Network Economy}},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract{\_}id=2882994},
year = {2018}
}
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