Title: Cash-in-Advance Constraints in the Diamond Overlapping Generations Model: Neutrality and Optimality of Monetary Policies
Abstract:This paper is a study of money in overlapping generations models with cash-in-advance constraints. We first offer a brief review of different features of the cash-in-advance constraint. Then we propose...This paper is a study of money in overlapping generations models with cash-in-advance constraints. We first offer a brief review of different features of the cash-in-advance constraint. Then we propose a general formulation and study the neutrality of money. We show that both neutrality and equilibrium dynamics depend on the form of the cashin-advance constraint. We then show that optimal intergenerational resources sharing can be implemented through monetary transfers. Finally, we find that the Chicago Rule is implied by optimal monetary policy.Read More
Publication Year: 1998
Publication Date: 1998-01-01
Language: en
Type: preprint
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