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A Monetary Search Model with Non-unitary Discounting

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  • Daiki Maeda

Abstract

Based on findings in the behavioral economics literature, we incorporate non-unitary discounting into a monetary search model to study optimal monetary policy. We apply non-unitary discounting, that is, discount rates that are different across goods. With this extension to the model, we find that there are cases where optimal monetary policy deviates from the Friedman rule.

Suggested Citation

  • Daiki Maeda, 2019. "A Monetary Search Model with Non-unitary Discounting," ISER Discussion Paper 1062, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:1062
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    File URL: https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2019/DP1062.pdf
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    References listed on IDEAS

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    1. Takeo Hori & Koichi Futagami & Shoko Morimoto, 2021. "Time-inconsistent discounting and the Friedman rule: roles of non-unitary discounting," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1200-1217.
    2. Takeo Hori & Koichi Futagami, 2019. "A Non‐unitary Discount Rate Model," Economica, London School of Economics and Political Science, vol. 86(341), pages 139-165, January.
    3. Ubfal, Diego, 2016. "How general are time preferences? Eliciting good-specific discount rates," Journal of Development Economics, Elsevier, vol. 118(C), pages 150-170.
    4. Berentsen, Aleksander & Camera, Gabriele & Waller, Christopher, 2007. "Money, credit and banking," Journal of Economic Theory, Elsevier, vol. 135(1), pages 171-195, July.
    5. Hiraguchi, Ryoji, 2018. "Temptation And Self-Control In A Monetary Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 22(4), pages 1076-1095, June.
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