An argument for positive nominal interest

In a dynamic economy, money provides liquidity as a medium of exchange. A central bank that sets the nominal rate of interest and distributes its profit to shareholders as dividends is traded in the asset market. A nominal rates of interest that tend to zero, but do not vanish, eliminate equilibrium allocations that do not converge to a Pareto optimal allocation.


Issue Date:
Dec 30 2015
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/269721
Language:
English
Total Pages:
26
JEL Codes:
D60; E10
Series Statement:
WERP 1104




 Record created 2018-03-21, last modified 2020-10-28

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