Optimal Monetary Policy in a Pure Currency Economy with Heterogenous Agents

30 Pages Posted: 17 Dec 2016 Last revised: 3 Feb 2017

See all articles by Nicola Amendola

Nicola Amendola

University of Rome Tor Vergata - Department of Economics and Finance

Leo Ferraris

Universidad Carlos III de Madrid

Fabrizio Mattesini

University of Rome Tor Vergata - Faculty of Economics

Date Written: December 16, 2016

Abstract

This paper shows that, in a pure currency economy with heterogeneous agents and multiple commodities, a pecuniary externality plays a key role in making the equilibrium allocation constrained inefficient. Monetary policy intervention can help improve matters.

Keywords: Money, Heterogeneity, Pecuniary Externality, Monetary Policy

JEL Classification: E40

Suggested Citation

Amendola, Nicola and Ferraris, Leo and Mattesini, Fabrizio, Optimal Monetary Policy in a Pure Currency Economy with Heterogenous Agents (December 16, 2016). CEIS Working Paper No. 394, Available at SSRN: https://ssrn.com/abstract=2886533 or http://dx.doi.org/10.2139/ssrn.2886533

Nicola Amendola (Contact Author)

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Rome
Italy

Leo Ferraris

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Fabrizio Mattesini

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

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