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The B.E. Journal of Macroeconomics

Editor-in-Chief: Cavalcanti, Tiago / Kambourov, Gueorgui

Ed. by Abraham, Arpad / Carceles-Poveda , Eva / Debortoli, Davide / Lambertini, Luisa / Nimark, Kristoffer / Wang, Pengfei

2 Issues per year


IMPACT FACTOR 2017: 0.378
5-year IMPACT FACTOR: 0.462

CiteScore 2017: 0.62

SCImago Journal Rank (SJR) 2017: 0.553
Source Normalized Impact per Paper (SNIP) 2017: 0.605

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1935-1690
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The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money

Moritz Ritter
Published Online: 2010-06-11 | DOI: https://doi.org/10.2202/1935-1690.1835

This paper incorporates a distortionary tax into a micro-foundations of money framework and revisits the optimum quantity of money. The money constraint in the decentralized market plays a key role in the optimal policy. Only if the constraint is binding can fiscal policy increase the buyer's surplus; monetary, but not fiscal, policy affects the agents' bargaining position, leaving a special role for monetary policy. If the buyer's surplus share is inefficiently small, the intensive margin is distorted and the constrained optimal policy includes a money growth rate above that prescribed by the Friedman rule, even in the presence of fiscal policy instruments. This effect is also present under competitive pricing.

Keywords: money; search; Friedman rule; sales tax

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Published Online: 2010-06-11


Citation Information: The B.E. Journal of Macroeconomics, Volume 10, Issue 1, ISSN (Online) 1935-1690, DOI: https://doi.org/10.2202/1935-1690.1835.

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