Author:
Sanches Daniel,Williamson Stephen
Abstract
A model is constructed in which trading partners are asymmetrically informed about future trading opportunities and spatial and informational frictions limit arbitrage between markets. These frictions create inefficiency relative to a full-information equilibrium, and the extent of this inefficiency is affected by monetary policy. A Friedman rule is optimal under a wide range of circumstances, including ones where segmented markets limit the extent of monetary policy intervention.
Publisher
Cambridge University Press (CUP)
Subject
Economics and Econometrics
Cited by
3 articles.
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