monetary policy.Chapter 1 studies the choice of endogenous means of payment when holding money is risky. In steady state … interest rate. Credit may be used when the return on money is not positive. A positive money injection reduces the crime rate … households exchange money for interest-bearing government nominal bonds in the asset market. The government injects money through …

money is the only medium of exchange. In equilibrium, money is nonneutral and monetary policy has asymmetric effects on … theft, real money holding, and consumption. The distributional effects persist over periods and the liquidity effect may … sustainable. Finally, the optimal money growth rate is to minimize theft and the Friedman rule is suboptimal. …