Munich Personal RePEc Archive

Money and Nominal Bonds

Marchesiani, Alessandro and Senesi, Pietro (2007): Money and Nominal Bonds. Forthcoming in: Macroeconomic Dynamics

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Abstract

This paper studies an economy with trading frictions, 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 the protection against the inflation tax.

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