This paper develops a monetary growth model in which inflation affects credit market efficiency, and via this link, capital accumulation, and the incomes of agents. Some fraction of the population is capitalists, who have access to a risky but high return capital production technology. Capital...

This paper reconsiders the link between tight money policies and inflation in the spirit of Sargent and Wallace's (1981) influential paper "Some Unpleasant Monetarist Arithmetic". A standard neoclassical model with production, capital, bonds, and return-dominated currency is used to study the...

This paper studies an overlapping generations economy with capital where limited communication and stochastic relocation create an endogenous transactions role for fiat money. We assume a production function with a knowledge externality (Romer-style) that nests economies with endogenous growth...

We explore the connection between optimal monetary policy and heterogeneity among agents. We utilize a standard monetary economy with two types of agents that differ in the marginal utility they derive from real money balances - a framework that produces a nondegenerate stationary distribution...

We study several popular monetary models which generate a nondegenerate stationary distribution of money holdings. Across these environments, our principal finding is as follows: a monetary policy that sets long run nominal interest rates to zero (the Friedman rule) does not typically maximize...

Many countries around the world have large public pension programs. Traditionally, these programs have been used to induce retirement by the elderly in order to free up jobs for the young and to redistribute income across generations. This paper provides an efficiency rationale for the...

Does it matter in a revenue-neutral setting if the government changes the inflation tax base or the inflation tax rate? We answer this question using an overlapping generations model in which bonds, capital, and cash reserves coexist, and the government uses seigniorage to service its debt,...

Does it matter in a revenue-neutral setting if the government changes the inflation tax base or the inflation tax rate? We answer this question using an overlapping generations model in which bonds, capital, and cash reserves coexist, and the government uses seigniorage to service its debt,...

This paper clarifies and extends previous work on the equivalence between monetary regimes and fiscal regimes involving social security systems. We show that monetary regimes involving currency and unbacked bonds, with or without reserve requirements, are equivalent to one or both of two...

In this paper we reconsider the link between tight money policies and inflation in the spirit of Sargent and Wallace's (1981) influential paper, "Some unpleasant monetarist arithmetic." A standard neoclassical model with capital, bonds, and return-dominated currency is used. The potential for...