Showing papers by "Neil Wallace published in 2008"
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TL;DR: In this paper, the authors studied optimal monetary policy in a model with heterogeneity in the degree to which different people are monitored (have publicly known histories), idiosyncratic shocks that give rise to heterogeneity in earning and spending realizations, and central-bank intervention in a "market" in claims or credit in which the participants are those who are heavily monitored.
Abstract: Optimal monetary policy is studied, by way of numerical examples, in a model with (i) heterogeneity in the degree to which different people are monitored (have publicly known histories); (ii) idiosyncratic shocks that give rise to heterogeneity in earning and spending realizations; and (iii) central-bank intervention in a “market” in claims or credit in which the participants are those who are heavily monitored. The results serve as counterexamples to two widely held views: optimal policy is unrelated to what makes money important; and, there are simple and well-known principles to guide monetary policy.