Optimal random monetary policy with nominal rigidity

• 成果类型: Article
• 署名作者: Dupor, B
• 署名单位: University of Pennsylvania
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/S0022-0531(03)00100-5
• 发表日期: 2003
• 页码: 66-78
• 关键词: Monetary policy; price rigidity; randomness

摘要

This paper studies a money-in-the-utility function model with imperfect competition and one-period ahead nominal price setting. Under standard assumptions on preferences, Friedman's rule-setting the money growth rate equal to the household time discount factor-generates an equilibrium that is optimal within the class of deterministic policies. We then provide conditions under which a random monetary policy increases ex ante expected welfare relative to Friedman's rule. The result obtains because random policy can reduce the distortion associated with imperfect competition. Our result exhibits original features relative to existing cases of welfare-improving random monetary policy, such as Polemarchakis and Weiss (J. Econom. Theory 15 (1977) 345). (C) 2003 Elsevier Inc. All rights reserved.