Implementing the Friedman Rule

Peter Ireland

Review of Economic Dynamics, 2003, vol. 6, issue 1, 120-134

Abstract: In cash-in-advence models, ncessary and sufficient conditions for the existence of an equilibrium with zero nominal interest rates and Pareto optimal allocations place restrictions only on the very long-run, or asymptotic, behavior of the money supply. When these asymptotic conditions are satisfied, they leave the central bank with a great deal of flexibility to manage the money supply over any finite horizon. But what happens when these asymptotic conditions fail to hold? This paper shows that the central bank can still implement the Friedman rule if its actions are appropriately constrained in the short run. (Copyright: Elsevier)

Keywords: Friedman rule; cash-in-advance model (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (14)

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Working Paper: Implementing the Friedman Rule (2002)
Working Paper: Implementing the Friedman Rule (2000)
Working Paper: Implementing the Friedman rule (2000)
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DOI: 10.1016/S1094-2025(02)00011-X

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