Another Example in which Lump-sum Money Creation is Beneficial

Alexei Deviatov () and Wallace Neil ()
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Wallace Neil: Penn State University

The B.E. Journal of Macroeconomics, 2001, vol. 1, issue 1, 22

Abstract: A probabilistic version of lump-sum money creation is studied in a random matching model with indivisible money and individual holdings bounded at 2 units. Sufficient conditions are obtained for an ex ante optimum from among implementable steady states to involve lump-sum creation of money. The role of that creation is to change the distribution of money holdings to permit more trade to occur. Beneficial money creation is impossible in a version with a 1 unit upper bound on individual holdings, but can almost certainly happen for all higher bounds.

Keywords: inflation; welfare; matching model (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (47)

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DOI: 10.2202/1534-6013.1001

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