The Evolution of Cash Transactions: Some Implications for Monetary Policy
نویسندگان
چکیده
This paper considers the implications of a decreasing demand for cash transactions under several monetary policy regimes. A policy of nominal-interest-rate targeting implies that a secular decline in the volume of cash transactions unambiguously leads to accelerating inflation. A policy of maintaining a fixed composition of government liabilities leads to accelerating (decelerating) inflation if agents have sufficiently high (low) levels of risk aversion. A policy of inflation targeting produces falling nominal and real interest rates, while a policy of fixing the rate of money growth can easily lead to indeterminacy and endogenous oscillation in interest rates. The Evolution of Cash Transactions: Some Implications for Monetary Policy STACEY L. SCHREFT AND BRUCE D. SMITH
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