Premium
Money in the production function: A new K eynesian DSGE perspective
Author(s) -
Benchimol Jonathan
Publication year - 2015
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/0038-4038-2011.197
Subject(s) - dynamic stochastic general equilibrium , economics , production (economics) , keynesian economics , perspective (graphical) , production function , new keynesian economics , function (biology) , monetary policy , monetary economics , macroeconomics , computer science , artificial intelligence , evolutionary biology , biology
This article checks whether money is an omitted variable in the production process by proposing a microfounded New Keynesian Dynamic Stochastic General Equilibrium model. In this framework, real money balances enter the production function, and money demanded by households is differentiated from that demanded by firms. Using a Bayesian analysis, our model weakens the hypothesis that money is a factor of production. However, the demand of money by firms appears to have a significant impact on the economy, even if this demand has a low weight in the production process.