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The Friedman Rule in an Overlapping Generations Model:Social Security in Reverse

dc.contributor.authorEden, Benjamin
dc.description.abstractThe welfare gains from adopting a zero nominal interest policy depend on the implementation details. Here I focus on a government loan program that crowds out lending and borrowing and other money substitutes. Since money can be costlessly created the resources spent on creating money substitutes are a "social waste". Moving from an economy with strictly positive nominal interest rate to an economy with zero nominal interest rate will increase consumption by the amount of resources spent on lending and borrowing. But in general welfare will increase by more than that because consumption smoothing is better under zero nominal interest rate.
dc.publisherVanderbilt Universityen
dc.subjectWelfare cost of inflation
dc.subjectmoney substitutes
dc.subjectwealth redistribution
dc.subjectFriedman rule
dc.subjectJEL Classification Number: E42
dc.subjectJEL Classification Number: E51
dc.subjectJEL Classification Number: E52
dc.subjectJEL Classification Number: E58
dc.subjectJEL Classification Number: H20
dc.subjectJEL Classification Number: H21
dc.subjectJEL Classification Number: H26
dc.titleThe Friedman Rule in an Overlapping Generations Model:Social Security in Reverse
dc.typeWorking Paperen

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