Journal Articles B.E. Journal of Macroeconomics Year : 2018

The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab

Abstract

In an experimental monetary general equilibrium economy, we assess two processes of monetary injection: credit expansion vs. lump-sum monetary transfers. In theory, both processes are neutral and exert no real effect on allocation. In the experiment, however, credit expansion leads to substantial distortions of real allocation and relative prices, and exerts a redistributive effect across subjects. By contrast, an increase in money through lump-sum transfers does not distort real allocation.

Dates and versions

halshs-01653459 , version 1 (01-12-2017)

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Romain Baeriswyl, Camille Cornand. The distortionary effect of monetary policy: credit expansion vs. lump-sum transfers in the lab. B.E. Journal of Macroeconomics, 2018, 18 (2), ⟨10.1515/bejm-2017-0037⟩. ⟨halshs-01653459⟩
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