Does Money Always Make People Happy?

Akiomi Kitagawa ()

Review of Economic Dynamics, 2001, vol. 4, issue 2, 495-515

Abstract: This paper presents an overlapping generations model with private information, in which the use of fiat money and the rampant moral hazard incentives sustain each other. It is shown that: there is a monetary equilibrium, despite the fact that the rate of return on the non-monetary asset is significantly higher thatn the rate of economic growth in the non-monetary case; the valuation of money is not necessarily Pareto-improving, but rather can be harmful to almost all generations; an inflationary policy can improve the welfare of all generations except the initial one. (Copyright: Elsevier)

Keywords: private information; moral hazard; fiat money (search for similar items in EconPapers)
JEL-codes: E41 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (1)

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DOI: 10.1006/redy.2000.0112

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