Arbeitspapier
An overlapping generations model for monetary policy analysis
We integrate an overlapping generations model into a new monetarist framework and show that the Friedman rule is not optimal. This is because inflation makes saving for retirement less attractive, such that young agents optimally choose to increase their consumption at the expense of lower savings. On the other hand, old agents consume less due to the inflation tax. We show that for low inflation rates, the former effect dominates the latter, such that the Friedman rule is not optimal. However, this effect disappears for higher inflation rates such that the optimal rate is at an intermediate level.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 272
- Classification
-
Wirtschaft
Micro-Based Behavioral Economics: General‡
Price Level; Inflation; Deflation
Demand for Money
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
- Subject
-
Overlapping generations
monetary theory
Friedman rule
- Event
-
Geistige Schöpfung
- (who)
-
Huber, Samuel
Kim, Jaehong
- Event
-
Veröffentlichung
- (who)
-
University of Zurich, Department of Economics
- (where)
-
Zurich
- (when)
-
2017
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Huber, Samuel
- Kim, Jaehong
- University of Zurich, Department of Economics
Time of origin
- 2017