nr 096 - Money Rules

DNB Working Papers
Date 9 April 2006

We assess a New Keynesian macro-economic model that is supplemented with a micro-founded role for money in determining aggregate demand and supply in order to better describe monetary policy transmission. In this model welfare is higher if the monetary authority takes money growth explicitly into account when setting interest rates. JEL codes: E52, E58 Key words: money, monetary policy, monetary transmission