Optimal Monetary Policy in OLG Models with Long-Lived Agents: A Note

Ryoji Hiraguchi

Journal of Public Economic Theory, 2014, vol. 16, issue 1, 164-172

Abstract: This note reexamines Crettez, Michel, and Wigniolle ([CRETTEZ, P., 2002]), who studied a two-period overlapping generations model with cash-in-advance constraints and showed that a combination of saving tax and monetary policy involving positive nominal interest rates could achieve the first-best allocation. The note shows that their result does not hold if agents live for three periods. The implementation of the first best requires the Friedman rule. If agents are long-lived, saving tax cannot offset a distortion caused by the positive nominal interest rate.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1111/jpet.12050 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:16:y:2014:i:1:p:164-172

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().