; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Money, Interest Rates, and Exchange Rates With Endogenously Segmented Asset Markets"; ; "batchuser@example.com"; "Alvarez, Fernando, 1964-", "Kehoe, Patrick J.", "Atkeson, Andrew"; "Federal Reserve Bank of Minneapolis"; "Liquidity effects", "Term structure of interest rates", "Volatile real exchange rates", "Baumol-Tobin model", "Fixed costs"; "F41 - Open Economy Macroeconomics", "E40 - Money and Interest Rates: General", "E43 - Interest Rates: Determination, Term Structure, and Effects", "E52 - Monetary Policy", "F31 - Foreign Exchange"; "This paper analyzes the effects of money injections on interest rates and exchange rates in a model in which agents must pay a Baumol-Tobin style fixed cost to exchange bonds and money. Asset markets are endogenously segmented because this fixed cost leads agents to trade bonds and money only infrequently. When the government injects money through an open market operation, only those agents that are currently trading absorb these injections. Through their impact on these agents’ consumption, these money injections affect real interest rates and real exchange rates. We show that the model generates the observed negative relation between expected inflation and real interest rates. With moderate amounts of segmentation, the model also generates other observed features of the data: persistent liquidity effects in interest rates and volatile and persistent exchange rates. A standard model with no fixed costs can produce none of these features."^^; "2000-08"; "2019-08-19T16:44:34.119719085+00:00"^^; "https://doi.org/10.21034/sr.278"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "2020-09-09T17:29:27.363257077+00:00"^^; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "393", "20", "39"; "Staff report (Federal Reserve Bank of Minneapolis. Research Department)"; "278"; "Baumol-Tobin model", "Liquidity effects", "Term structure of interest rates", "Fixed costs", "Volatile real exchange rates"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; """Published in: _Journal of Political Economy_ (Vol. 110, No. 1, February 2002, pp. 73-112) https://doi.org/10.1086/324389. An earlier version of this Staff Report was published as [Working Paper 605](https://doi.org/10.21034/wp.605)."""^^; ; "Publication" . ; .