An argument for positive nominal interest

Gaetano Bloise and Herakles Polemarchakis
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Herakles Polemarchakis: Department of Economics, University of Warwick

CRETA Online Discussion Paper Series from Centre for Research in Economic Theory and its Applications CRETA

Abstract: In a dynamic economy, money provides liquidity as a medium of exchange.A central bank that sets the nominal rate of interest and distributes its profit to shareholders as dividends is traded in the asset market. A nominal rates of interest that tend to zero, but do not vanish, eliminate equilibrium allocations that do not converge to a Pareto optimal allocation.

Keywords: nominal rate of interest; dynamic efficiency JEL classification numbers: D60; E10. (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mac
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https://warwick.ac.uk/fac/soc/economics/research/c ... nominal_interest.pdf

Related works:
Chapter: An Argument for Positive Nominal Interest (2017)
Working Paper: An argument for positive nominal interest (2015)
Working Paper: An argument for positive nominal interest (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:wcreta:14

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