Showing papers by "Neil Wallace published in 1979"
TL;DR: The coexistence of money and default-free interest-bearing government bonds is explained by transaction costs; the private sector absorbs money with less real difficulty than it absorbs bonds.
Abstract: The coexistence of money and default-free interest-bearing government bonds is explained by transaction costs; the private sector absorbs money with less real difficulty than it absorbs bonds. Under the assumption that the costs of issuing money and issuing bonds are identical, it follows that the presence of government bonds is inefficient. Further, the steady-state inflation rate is higher with bond financing of a given real deficit because there is less net output, less real saving, and hence the need for the government to inflate faster. This is demonstrated in a version of Samuelson's pure consumption-loans model.
68 citations
TL;DR: In this paper, the authors argue that the only feasible regimes for these special markets are floating exchange rates with capital controls or fixed exchange rates for monetary and budget policy coordination, and that any price will work in these markets.
Abstract: This paper, originally published in the fall 1979 Quarterly Review, explains why unfettered markets cannot determine a price at which the currency of one country exchanges for that of another. In effect, any price will work--something which is not true in other markets. The paper then argues that the only feasible regimes for these special markets are floating exchange rates with capital controls or fixed exchange rates with monetary and budget policy coordination. ; Originally published in Quarterly Review, Fall 1979.
31 citations
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TL;DR: In this paper, a welfare analysis of monetary policy rules that differ as regards the extent to which monetary policy accommodates an exogenous, stochastic deficit is presented, and it is shown that a non-commodating rule, one involving a higher ratio of bonds to currency the higher the deficit, is not necessarily better than rules that accommodate: either a rule involving a constant ratio of bond to currency or a rule with a lower ratio of currency to bond the more the deficit.
Abstract: This paper presents a welfare analysis of monetary policy rules that differ as regards the extent to which monetary policy accommodates an exogenous, stochastic deficit. Examples show that a nonaccommodating rule, one involving a higher ratio of bonds to currency the higher the deficit, is not necessarily better than rules that accommodate: either a rule involving a constant ratio of bonds to currency or one involving a lower ratio of bonds to currency the higher the deficit. Moreover, the nonaccommodating rule can imply more variation in the price level than the accommodating rules.
2 citations
Posted Content•
TL;DR: In this article, a welfare analysis of monetary policy rules that differ as regards the extent to which monetary policy accommodates an exogenous, stochastic deficit is presented, and it is shown that a non-commodating rule, one involving a higher ratio of bonds to currency the higher the deficit, is not necessarily better than rules that accommodate: either a rule involving a constant ratio of bond to currency or a rule with a lower ratio of currency to bond the more the deficit.
Abstract: This paper presents a welfare analysis of monetary policy rules that differ as regards the extent to which monetary policy accommodates an exogenous, stochastic deficit. Examples show that a nonaccommodating rule, one involving a higher ratio of bonds to currency the higher the deficit, is not necessarily better than rules that accommodate: either a rule involving a constant ratio of bonds to currency or one involving a lower ratio of bonds to currency the higher the deficit. Moreover, the nonaccommodating rule can imply more variation in the price level than the accommodating rules.
1 citations