Optimal monetary policy with heterogeneous agents: a case for inflation
Oxford Economic Papers, 2005, vol. 57, issue 1, pages 34-50
This paper analyses the role of monetary policy in an overlapping-generations monetary growth model with two types of agents, who exhibit a different degree of altruism towards their descendants. It is shown that changes in the money growth rate have significant distributional effects. Furthermore, the optimal rate of monetary expansion is, in general, higher than the one implied by the Friedman rule and may, in fact, yield a small but positive rate of inflation, even though capital is invariant to changes in the money growth rate. Finally, this optimal rate of monetary expansion takes higher values as the society's aversion towards inequality increases. Copyright 2005, Oxford University Press.
References: Add references at CitEc
Citations View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:oup:oxecpp:v:57:y:2005:i:1:p:34-50
Ordering information: This journal article can be ordered from
Access Statistics for this article
Oxford Economic Papers is currently edited by A. Banerjee and James Forder
More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Series data maintained by Oxford University Press ().