Money growth, dynamic efficiency and asset bubbles in a perpetual youth model

Gianluca Femminis

Economics Letters, 2016, vol. 138, issue C, 68-71

Abstract: We consider a perpetual youth model in which real balances are an argument of the utility function. We show that dynamic efficiency is compatible with a positive inflation rate, and that the higher inflation, the larger is the size of the bubble required to remove the inefficiency.

Keywords: Asset bubbles; Dynamic inefficiency; Money growth (search for similar items in EconPapers)
JEL-codes: O4 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:138:y:2016:i:c:p:68-71

DOI: 10.1016/j.econlet.2015.11.029

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