Implementing the Friedman Rule

Peter Ireland

No 8821, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In cash-in-advance models, necessary and sufficient conditions for the existence of an equilibrium with zero nominal interest rates and Pareto optimal allocations place restrictions mainly 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.

JEL-codes: E52 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-mon
Note: ME
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Citations: View citations in EconPapers (3)

Published as Ireland, Peter N. "Implementing The Friedman Rule," Review of Economic Dynamics, 2003, v6(1,Jan), 120-134.

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Related works:
Journal Article: Implementing the Friedman Rule (2003)
Working Paper: Implementing the Friedman Rule (2000)
Working Paper: Implementing the Friedman rule (2000)
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