dc.contributor.author | Bhattacharya, Joydeep | eng |
dc.contributor.author | Haslag, Joseph H. | eng |
dc.contributor.author | Martin, Antoine | eng |
dc.contributor.author | Singh, Rajesh | eng |
dc.date.issued | 2004 | eng |
dc.description.abstract | In this paper, we explore the connection between optimal monetary policy and heterogeneity among agents. We study a standard monetary economy with two types of agents in which the stationary distribution of money holdings is non-degenerate. Sans type-specific fiscal policy, we show that the zero-nominal-interest rate policy (the Friedman rule) does not maximize type-specific welfare; it may not maximize aggregate social welfare either. Indeed, one or, more surprisingly, both types may benefit if the central bank deviates from the Friedman rule. Our results suggest a positive explanation for why central banks around the world do not implement the Friedman rule. | eng |
dc.identifier.citation | Department of Economics, 2004 | eng |
dc.identifier.uri | http://hdl.handle.net/10355/2643 | eng |
dc.language | English | eng |
dc.publisher | Department of Economics | eng |
dc.relation.ispartof | Economics publications | eng |
dc.relation.ispartofcommunity | University of Missouri-Columbia. College of Arts and Sciences. Department of Economics | eng |
dc.relation.ispartofseries | Working papers (Department of Economics);WP 04-21 | eng |
dc.source.uri | http://economics.missouri.edu/working-papers/2004/wp0421_haslag.pdf | eng |
dc.subject | Friedman rule | eng |
dc.subject | monetary policy | eng |
dc.subject | money-in-the-utility-function | eng |
dc.subject.lcsh | Monetary policy | eng |
dc.subject.lcsh | Monetary models -- Econometric models | eng |
dc.title | Who is Afraid of the Friedman Rule? | eng |
dc.type | Working Paper | eng |