Who is afraid of the Friedman rule?
By: Joydeep Bhattacharya ... [et al.].
Contributors: Bhattacharya, Joydeep.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 208; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 208.
Publisher: Federal Reserve Bank of New York
Published: 2005
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Monetary policy -- Mathematical models.; Money supply -- Mathematical models.
Description: "We explore the connection between optimal monetary policy and heterogeneity among agents. We utilize a standard monetary economy with two types of agents that differ in the marginal utility they derive from real money balances--a framework that produces a nondegenerate stationary distribution of money holdings. Without type-specific fiscal policy, we show that the zero-nominal-interest-rate policy (the Friedman rule) does not maximize type-specific welfare; further, it may not maximize aggregate ex ante social welfare. Indeed one or, more surprisingly, both types of agents may benefit if the central bank deviates from the Friedman rule"--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 5/5/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.