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Bonds with transactions service and optimal Ramsey policy

Hu, Yifan; Kam, Timothy


We introduce a model of government bonds with transactions services into a standard dynamic stochastic general equilibrium sticky-price monetary economy. This additional feature results in an endogenous interest-rate spread and affects equilibrium allocations and inflation by altering the Ramsey planner's sequence of implementability and sticky-price constraints. Qualitatively, the trade-off confronting a planner in sticky-price models shown in recent literature, between using inflation...[Show more]

CollectionsANU Research Publications
Date published: 2009
Type: Journal article
Source: Journal of Macroeconomics
DOI: 10.1016/j.jmacro.2009.01.006


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