Efficient monetary equilibrium: An overlapping generations model with nonstationary monetary policies

Joan Esteban, Tapan Mitra, Debraj Ray

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This paper is concerned with the characterization of public debt policies that are consistent with competitive equilibria in which (i) money is positively priced, and (ii) intertemporal allocation is efficient. The framework used is an overlapping generations model with many goods, agents with two-period lifetimes, and nonstationary tax-transfer policies. We show, under some regularity conditions on such policies that the size of the public debt not growing “too fast” is both necessary and sufficient for the existence of an efficient monetary equilibrium. Journal of Economic Literature Classification Numbers: 021, 311, 321.

    Original languageEnglish (US)
    Pages (from-to)372-389
    Number of pages18
    JournalJournal of Economic Theory
    Volume64
    Issue number2
    DOIs
    StatePublished - Dec 1994

    ASJC Scopus subject areas

    • Economics and Econometrics

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