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MONEY AND NOMINAL BONDS
Published online by Cambridge University Press: 01 April 2009
Abstract
This paper studies an economy with ex post heterogeneity and nominal bonds in a model à la Lagos and Wright (2005). It is shown that a strictly positive interest rate is a sufficient condition for the allocation with nominal bonds to be welfare-improving. This result comes from protection against the inflation tax.
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- Copyright © Cambridge University Press 2009
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