Optimal money growth in a limited participation model with heterogeneous agents

Erdem Basci and Ismail Saglam

Review of Economic Design, 2005, vol. 9, issue 2, 108 pages

Abstract: This paper studies optimal money growth in a cash-in-advance production economy with heterogeneity in patience levels and know-how. We show that the rate of deflation suggested by the Friedman rule is limited by the subjective discount rate of the most patient agent in the economy. The output distortion due to cash-in-advance constraints on firms can completely be eliminated by means of the Friedman rule if and only if firms are run by the most patient agents. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Cash-in-advance; limited participation; inflation; Friedman rule (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10058-005-0122-1 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Optimal Money Growth in A Limited Particpation Model with Heterogenous Agents (2000)
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:spr:reecde:v:9:y:2005:i:2:p:91-108

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10058

DOI: 10.1007/s10058-005-0122-1

Access Statistics for this article

Review of Economic Design is currently edited by Atila Abdulkadiroglu, Fuhito Kojima and Tilman Börgers

More articles in Review of Economic Design from Springer, Society for Economic Design
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().