We generalize the monetary economy of Lucas and Stokey to the case of a neo-classical production economy. Money non-neutrality is shown to be generic, even though the representative agent¿s utility is log separable. The capital/wealth ratio plays a key role in the transmission mechanism of monetary policy. Empirical evidence supports the hypothesized influence of this ratio on the US equity market premium.
LIOUI, A. et PONCET, P. (2010). Money and Asset Prices in a Production Economy. Finance, 31(2), pp. 7-49.