Sub-optimality of the Friedman rule in Townsend's turnpike and stochastic relocation models of money: do finite lives and initial dates matter?

Joydeep Bhattacharya, Joseph Haslag and Antoine Martin

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The Friedman rule, a widely studied prescription for monetary policy, is optimal in Townsend's turnpike model of money; it is not so in the overlapping generations version of his stochastic relocation model of money. We investigate these monetary models in the light of this disparity. To that end, we create a modified version of the turnpike model that generates the same stationary monetary equilibria as does the two-period overlapping generations model with random relocation. We exploit this equivalence to explain the aforementioned disparity. We also discuss the importance of whether or not the economy has an initial date.

Date: 2005-03-23
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dr.lib.iastate.edu/server/api/core/bitstre ... cd685cc3ffd9/content
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: Sub-optimality of the Friedman rule in Townsend's turnpike and stochastic relocation models of money: Do finite lives and initial dates matter? (2006)
Working Paper: Sub-optimality of the Friedman rule in Townsend's turnpike and stochastic relocation models of money: do finite lives and initial dates matter? (2006)
Working Paper: Sub-Optimality of the Friedman Rule in Townsend's Turnpike and Stochastic Relocation Models of Money: Do Finite Lives and Initial Dates Matter? (2005)
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:isu:genstf:200503230800001194

Access Statistics for this paper

More papers in ISU General Staff Papers from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().