In this paper, I provide a rationale for why money should earn interest; or, what amounts to the same thing, why risk …-free claims to non-interest-bearing money should trade at discount. I argue that interest-bearing money is essential when … individual money balances are private information. The analysis also suggests one reason for why it is sufficient (as well as …

monetary exchange and credit. Imperfect memory makes money useful, but it also permits theft to go undetected, and therefore … theft, and the optimal money growth rate tends to rise as the cost of theft falls. …

provides a deeper understanding of the link between asset prices and consumption. It shows that this approach gives only a … partial explanation for recent trends in US consumption. Comparing wealth effects in Anglo Saxon countries with continental … consumption. …

instability by giving rise to multiple equilibria and as a result to fluctuations caused by self fulfilling expectations. This … relative to private consumption, a neutral monetary policy [such that the real rate of interest is constant in and off the …