Essential Interest-Bearing Money

David Andolfatto ()

No 802, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: I examine a version of the Lagos and Wright (2005) monetary model where coercive lump-sum taxation is infeasible. Despite this restriction, I demonstrate that the first-best allocation remains implementable under an appropriately designed monetary policy; at least, if agents are sufficiently patient. The main conclusion is that any incentive-feasible monetary policy necessarily requires a strictly positive nominal interest rate to be paid on money balances.

Pages: 16 pages
Date: 2008, Revised 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.eief.it/files/2012/09/wp-02-essential-interest-bearing-money.pdf (application/pdf)

Related works:
Journal Article: Essential interest-bearing money (2010)
Working Paper: Essential interest-bearing money (2009)
Working Paper: Essential Interest-Bearing Money (2007)
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:eie:wpaper:0802

Access Statistics for this paper

More papers in EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF) Contact information at EDIRC.
Bibliographic data for series maintained by Facundo Piguillem ().