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Nominal Idiosyncratic Shocks and Optimal Monetary Policy

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  • Eisei Ohtaki

Abstract

This article considers an overlapping generations model with nominal idiosyncratic shocks. Such shocks are described as if they are exogenous nominal taxes/subsidies and cause nondegenerate ex-post distributions of money. We then show that the optimal money growth rate exists and is greater than one.

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  • Eisei Ohtaki, 2013. "Nominal Idiosyncratic Shocks and Optimal Monetary Policy," Working Papers e057, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e57
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    References listed on IDEAS

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    1. Joseph H. Haslag & Antoine Martin, 2007. "Optimality of the Friedman Rule in an Overlapping Generations Model with Spatial Separation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(7), pages 1741-1758, October.
    2. Ohtaki, Eisei, 2013. "Golden rule optimality in stochastic OLG economies," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 60-66.
    3. Zhu, Tao, 2008. "An overlapping-generations model with search," Journal of Economic Theory, Elsevier, vol. 142(1), pages 318-331, September.
    4. Bruce D. Smith, 2002. "Monetary Policy, Banking Crises, and the Friedman Rule," American Economic Review, American Economic Association, vol. 92(2), pages 128-134, May.
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