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Creator: Coleman, Wilbur John Series: Nonlinear rational expectations modeling group Abstract: A cashinadvance constraint on consumption is incorporated into a standard model of consumption and capital accumulation. Monetary policy consists of lumpsum cash transfers. Methods are developed for establishing the existence and uniqueness of an equilibrium. and for explicitly constructing this equilibrium. The model economy's dependence on monetary policy is explored.
La description: Also published in the International Finance Discussion Paper series, number 323.
Motclé: Planned Growth economy, Monetary Growth economy, and Equilibrium Assujettir: O42  Economic growth and aggregate productivity  Monetary growth models, E31  Prices, business fluctuations, and cycles  Price level ; Inflation ; Deflation, O41  One, Two, and Multisector Growth Models, and E52  Monetary policy, central banking, and the supply of money and credit  Monetary policy 
Creator: Den Haan, Wouter J., 1962 Series: Nonlinear rational expectations modeling group Abstract: The objective of this paper is to investigate whether, in a Sidrauski type model with uncertainty, welfare maximization calls for following the famous "Chicago Rule". This question will be answered in the affirmative in this paper, i.e. social welfare optimization calls for a zero nominal interest rate on oneperiod bonds. The zero nominal interest rate, however, does not imply in an uncertain world that there is no systematic difference between the expected rate of deflation and the rate of time preference in an economy without growth. The magnitude of this difference turns out to be small, however. Numerical welfare comparisons are made between the optimal policy and policies in which the growth rate of money is fixed. The optimal policy requires that the monetary authorities react every period to the available information and they choose a growth level of the money stock that will set the interest rate equal to zero. If we compare the time paths of the real variables under the optimal policy with the time paths if the money supply decreases at a rate equal to the rate of time preference, then we see hardly any differences. The price dynamics can be very different, however. The paper also investigates the issue of superneutrality and finds that the quantitative deviations from superneutrality are substantial if a model with a shopping time technology is used. The neoclassical models in this paper are solved numerically using a technique developed in Marcet (1988).
Assujettir: E31  Prices, business fluctuations, and cycles  Price level ; Inflation ; Deflation and E52  Monetary policy, central banking, and the supply of money and credit  Monetary policy 
Creator: Baxter, Marianne, 1956 Series: Nonlinear rational expectations modeling group Abstract: This paper develops a new method for approximating dynamic competitive equilibria in economies in which competitive equilibrium is not necessarily Pareto optimal. The method involves finding approximate equilibrium policy functions by iterating on the stochastic Euler equations which characterize the economy's equilibrium. Two applications are presented: the stochastic growth model of Brock and Mirman (1971) modified to allow distortionary taxation, and a model of inflation and capital accumulation based on Stockman (1981). The computational speed and accuracy of this approach suggests that it may be a feasible method for studying suboptimal economies with large state spaces.
Assujettir: C61  Mathematical methods and programming  Optimization techniques ; Programming models ; Dynamic analysis, E51  Monetary policy, central banking, and the supply of money and credit  Money supply ; Credit ; Money multipliers, and C63  Mathematical methods and programming  Computational techniques ; Simulation modeling 


