search query: @indexterm Monetary Policy / total: 1108
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| Author: | Palivos, T. |
| Title: | Optimal monetary policy with heterogeneous agents: a case for inflation |
| Journal: | Oxford Economic Papers
2005 : JAN, VOL. 57:1, p. 34-50 |
| Index terms: | Monetary policy Inflation Models |
| Language: | eng |
| Abstract: | The paper analyses the role of monetary policy in an overlapping-generations monetary (henceforth as: m-try.) growth model with two types of agents, who exhibit a different degree of altruism towards their descendants. It is shown that changes in the money growth rate have significant distributional effects. In addition, the optimal rate of m-try. expansion is, in general, higher than the one implied by the Friedman rule. In fact, it may yield a small but positive rate of inflation, even though capital is invariant to changes in the money growth rate. Finally, this optimal rate of m-try. expansion takes higher values as the society's aversion towards inequality increases. |
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