Friedman Meets Hosios
Efficiency in Search Models of Money
Bibliographic Data
| ID | 9708263 |
|---|---|
| Authors | Aleksander Berentsen (University of Basel), Guillaume Rocheteau (Federal Reserve Bank of Cleveland), Shouyong Shi (University of Toronto) |
| Year | 2007 |
| Volume | 117 |
| Issue | 516 |
| Pages | 174-195 |
| Publication date | 2007-01-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/j.1468-0297.2007.02006.x |
| OpenAlex | W3121918412 |
| Language | EN |
| Citations received | 1 |
| References cited | 20 |
This article studies optimal monetary policy in an economy with endogenous search decisions. We show that the same frictions that give fiat money a positive value generate an inefficient quantity of goods in each trade and an inefficient number of trades. The Friedman rule eliminates the first inefficiency and the Hosios rule the second. A monetary equilibrium attains the social optimum if and only if both rules are satisfied. When they cannot be satisfied simultaneously, optimal monetary policy achieves only the second best. We analyse the conditions under which the second-best monetary policy exceeds the Friedman rule. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007
Barter · Economics · Fiat money · Friedman rule · Inefficiency · Macroeconomics · Mathematical economics · Microeconomics · Monetary economics · Monetary policy · Order (exchange · Set (abstract data type · Value (mathematics · Complex Systems and Time Series Analysis · Computer Science · Economic theories and models · Economic Theory and Policy
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,06 |
| Citation span | 2010 - 2010 (1) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 1 |