In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants … to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation … activity, so the optimal quantity of money is inherently stochastic. Efficiency in such an environment requires the capacity to …

In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants … to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation … activity, so the optimal quantity of money is inherently stochastic. Efficiency in such an environment requires the capacity to …

The fact that money, banking, and financial markets interact in important ways seems self-evident. The theoretical … for government money, where the terms of bank deposit contracts are constrained by the liquidity insurance available in … inflation policy and as a lender of last resort. The model provides a rationale for nominal deposit contracts combined with a …