Working Paper

The Real Effect of Money Growth in Dynamic General Equilibrium


  • Graham
  • L.
  • Snower
  • D.J.
Publication Date

We analyse the effects of money growth within a standard New Keynesian framework and show that the interaction between staggered nominal contracts and money growth leads to a long-run trade-off between output and money growth. We explore the microeconomic mechanisms that lead to this trade-off, and show that it remains even when the contract length is endogenised.

Kiel Institute Expert


JEL Classification
E20, E40, E50

Key Words

  • dynamic general equilibrium
  • Inflation
  • monetary policy
  • Nominal inertia
  • Phillips curve
  • Phillips-Kurve
  • unemployment