Optimal monetary policy and economic growth Export

@article{citeulike:4169976, abstract = {A question at the center of many analyses of optimal monetary policy is, why do central banks never implement the Friedman rule? To the list of answers to this question, we add neoclassical production (specifically, the Tobin effect) as one possible explanation. To that end, we study 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 ( AK form) and those with no long-run growth (the Diamond model). The Tobin effect is shown to be always operative. Under CRRA preferences, a mild degree of social increasing returns is sufficient (but not necessary) for some positive inflation to dominate zero inflation and for the Friedman rule to be sub-optimal, irrespective of the degree of risk aversion.}, author = {Bhattacharya, Joydeep and Haslag, Joseph and Martin, Antoine}, citeulike-article-id = {4169976}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/j.euroecorev.2008.03.003}, citeulike-linkout-1 = {http://linkinghub.elsevier.com/retrieve/pii/S0014292108000226}, doi = {10.1016/j.euroecorev.2008.03.003}, issn = {00142921}, journal = {European Economic Review}, keywords = {growth, monetary\_policy}, month = {February}, number = {2}, pages = {210--221}, posted-at = {2009-03-13 07:29:07}, priority = {2}, title = {Optimal monetary policy and economic growth}, url = {http://dx.doi.org/10.1016/j.euroecorev.2008.03.003}, volume = {53}, year = {2009} }

TY - JOUR ID - citeulike:4169976 L3 - citeulike-article-id:4169976 N2 - A question at the center of many analyses of optimal monetary policy is, why do central banks never implement the Friedman rule? To the list of answers to this question, we add neoclassical production (specifically, the Tobin effect) as one possible explanation. To that end, we study 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 ( AK form) and those with no long-run growth (the Diamond model). The Tobin effect is shown to be always operative. Under CRRA preferences, a mild degree of social increasing returns is sufficient (but not necessary) for some positive inflation to dominate zero inflation and for the Friedman rule to be sub-optimal, irrespective of the degree of risk aversion. IS - 2 JF - European Economic Review SN - 00142921 EP - 221 TI - Optimal monetary policy and economic growth VL - 53 SP - 210 KW - growth KW - monetary_policy AU - Bhattacharya, Joydeep AU - Haslag, Joseph AU - Martin, Antoine PY - 2009/02// UR - http://dx.doi.org/10.1016/j.euroecorev.2008.03.003 ER -