Money and Nominal Bonds

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

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: money, search, nominal bonds and taxation
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt

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