Alvarez, Fernando. <br/><br/>
On the Sluggish Response of Prices to Money in an Inventory-Theoretic Model of Money Demand / 
Fernando Alvarez, Andrew Atkeson, Chris Edmond. 
 - Cambridge, Mass.  National Bureau of Economic Research  2003. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w10016 .
 - Working Paper Series (National Bureau of Economic Research)  no. w10016. .
<br/><br/> October 2003. 
<br/><br/> We exposit the link between money, velocity and prices in an inventory-theoretic model of the demand for money and explore the extent to which such a model can account for the short-run volatility of velocity, the negative correlation of velocity and the ratio of money to consumption, and the resulting  stickiness' of the aggregate price level relative to a benchmark model with constant velocity. We find that an inventory-theoretic model of the demand for money is a natural framework for understanding these aspects of the dynamics of money, velocity and prices in the short run. 
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