Sidrauski Model with Endogenous Labor
Management Information Systems: the International Scientific Journal, No. 1, pp. 42-46, 2007
11 Pages Posted: 25 Apr 2009 Last revised: 2 Nov 2009
Date Written: April 1, 2007
In the paper we analyze the Sidrauski model similar by Walsh (2003) (see for example Sterken, 2005). For analyses it is needed to use Dynamic optimization techniques. The model is extended by endogenous labor. We show that all Walsh's conditions are kept. Even though in steady state analysis in generally the superneutrality of money theory does not hold. Labor supply, is no longer inelastic and influences marginal productivity. To reach the money superneutrality we must assume that preferences of representative consumer are represented by separable utility function. A similar analysis was made by Walsh, the results are the same in general case.
Keywords: Sidrauski Model, Labor, Dynamic Programming, Envelope Theory. Steady State. Supernautrality of Money. Separable Utility Function. Friedman (Chicago) Rule
JEL Classification: C02. E13
Suggested Citation: Suggested Citation