Econometrica: Sep 1980, Volume 48, Issue 6

A Capital Market in an Equilibrium Business Cycle Model

https://doi.org/0012-9682(198009)48:6<1393:ACMIAE>2.0.CO;2-D
p. 1393-1417

Robert J. Barro

Previous equilibrium business cycle models are extended by the incorporation of an economy-wide capital market. This extension alters the information structure of these models and modifies the relative price variable that transmits money shocks to real variables. Monetary effects on nominal and real interest rates are a focus of the analysis.

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