Title

Heterogeneity, redistribution, and the Friedman rule

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

5-5-2005

Journal or Book Title

International Economic Review

Volume

46

Issue

2

First Page or Article ID Number

437

Last Page

454

DOI

10.1111/j.1468-2354.2005.00327.x

Abstract

We study monetary models with nondegenerate stationary distributions of money holdings. We find that the Friedman rule does not typically maximize ex post social welfare. An increase in the rate of growth of the money supply has two effects: the standard distortionary, or rate‐of‐return, effect makes money a less desirable asset for all moneyholders. A second, redistributive effect, creates a transfer from one type of agent to the other. An increase in the rate of growth of money away from the Friedman rule can produce a rate‐of‐return effect that dominates the standard effect.

JEL Classification

E31, E51, H23

Comments

This article is published as Heterogeneity, Redistribution, and the Friedman rule (with A. Martin and J. Haslag), International Economic Review, 46 (2), 437-454, 2005. DOI: 10.1111/j.1468-2354.2005.00327.x. Posted with permission.

Copyright Owner

Wiley Online Library

Language

en

File Format

application/pdf

Published Version Working Paper

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