The optimal quantity of money over the business cycle and at the zero lower bound
نویسنده
چکیده
The paper presents a general equilibrium model where agents have limited participation in nancial markets and use money to smooth consumption. This framework is consistent with recent empirical ndings on money demand. New developments in the heterogeneous agents literature are used to develop a tractable framework with aggregate shocks, where optimal monetary policy can be analyzed. It is shown that the market allocation is not e¢ cient because participating agents do not have the right incentives to save. Monetary policy can restore the rst best allocation because of its redistributive e¤ect. When the zero lower bound binds, monetary policy can still restore the rst best, but only if the new money is created by open market operations. JEL : E41, E52, E32
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تاریخ انتشار 2014