THE AVAILABILITY DOCTRINE

This paper develops a general equilibrium model in which monetary dist urbances have effects reminiscent of Roosa's classic description of th e availability doctrine. The model is a marriage of the modern credit rationing literature and the recent sluggish cash flow models of monet ary transmission. Both elements are crucial. The credit rationing aspe ct leads to a focus upon the quantity or availability of credit. Howev er, the rationing model in and of itself is a real model, and there is no reason for fluctuations in the nominal quantity of fiat money to h ave any effect on the availability of real credit. This is where the s luggish cash flow assumption enters into the analysis. Under this assu mption, changes in the nominal supply of fiat money do affect the real supply of credit because a subset of the economy absorbs a disproport ionate share of the monetary injection.