Optimal Monetary Policy in a Pure Currency Economy with Heterogenous Agents

Amendola NicolaFerraris LeoMattesini Fabrizio
CEIS Research Paper
This paper shows that, in a pure currency economy with heterogeneous agents and multiple commodities, a pecuniary externality plays a key role in making the equilibrium allocation constrained inefficient. Monetary policy intervention can help improve matters.

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Number: 394
Keywords: Money, Heterogeneity, Pecuniary Externality, Monetary Policy
JEL codes: E40
Volume: 14
Issue: 12
Date: Saturday, December 17, 2016
Revision Date: Saturday, December 17, 2016