frictions giving rise to money as a medium of exchange are explicitly modeled. The framework is a three period OLG model where … production efficiency in the search market. In the absence of record-keeping, the government uses flat money as a substitute for … distortionary taxation of money may be needed as part of the optimal policy even if lump-sum taxes are available. …

We study the effects of money (anticipated inflation) on capital formation. Previous papers on this topic adopt reduced …-form approaches, putting money in the utility function or imposing cash in advance, but use otherwise frictionless models. We follow a … literature that is more explicit about the frictions making money essential. This introduces several new elements, including a …

stabilization policy in a DSGE model with microfounded money demand and endogenous firm entry. Due to a congestion externality …

fully flexible and money is essential for trade. Our main result is that if the central bank pursues a price-level target … policy involves smoothing nominal interest rates which effectively smooths consumption across states. …

This paper revisits the issue of money growth versus the interest rate as the instrument of monetary policy. Using a … of inflation relative to money growth depends on whether the central bank follows a money growth rule or an interest rate … rule. With a money growth rule, inflation is not persistent and the price level is much more volatile than the money supply …

because of a change in its day-to-day behavior in money markets or the way it reacts to news about unemployment or real GDP …