Abstract :
The effectsofmoney(anticipatedinflation)oncapitalformationisaclassicissuein
macroeconomics.Previouspapersadoptreduced-formapproaches,puttingmoneyin
theutilityfunction,orimposingcashinadvance,butusingotherwisefrictionless
models.Wefollowinsteadaliteraturethattriestobeexplicitaboutthefrictions
makingmoneyessential.Thisintroducesnewelements,includingatwo-sector
structurewithcentralizedanddecentralizedmarkets,stochastictradingopportunities,
and bargaining.Theseelementsmatterquantitativelyandnumericalresultsdifferfrom
findingsinthereduced-formliterature.Theanalysisalsoreducesagapbetween
microfoundedmonetaryeconomicsandmainstreammacro
