Reallocation of production inputs in a monetary economy

摘要

This paper explains the return correlation between money and competing assets, the coexistence puzzle, and the effect of inflation on output. As the model allows sellers to use lands as an input, buyers' portfolios can rebalance from money to land in response to inflation expanding sellers' production, which explains the positive correlation between output and inflation and the negative correlation between the return on money and land. Although the return on money is dominated by land, both assets are used in equilibrium. (C) 2019 Elsevier B.V. All rights reserved.