On Heterogeneity in a Fundamental Model of Money

Gabriele Camera and Paola Boel

No 92, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: In this preliminary version we consider different types of ex-ante heterogeneity (production cost, preferences, market access, etc.) in a Lagos-Wright (2003) framework. Such heterogeneity generates equilibrium inequality in nominal wealth, or money holdings. We have two basic objectives. First, we want to understand under what types of heterogeneity a simple monetary policy a' la Friedman is capable to generate optimal trades, and under what types it does not. Second if the Friedman rule cannot achieve efficiency, we ask if some redistributive monetary policy can achieve efficiency. Finally, we briefly examine the relationship between inflation and consumption inequality in the economy

Keywords: Money; Heterogeneity; Friedman Rule (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (1)

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