Jealousy and monetary policy
Abstract
The purpose of this paper is to examine the implications of jealousy for the welfare effects of monetary policy. Jealousy implies that consumption is like pollution: overconsumption may occur because households do not internalize the costs of their consumption to others. This externality opens the door for a beneficial monetary policy intervention. I show that the welfare effects of monetary policy depend on jealousy, the monopolistic distortion and the utility of real balances. If households are "too jealous," a rise in the money supply reduces welfare by increasing consumption that is already inefficiently high.Download Info
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Bibliographic Info
Article provided by Elsevier in its journal The Journal of Socio-Economics.
Volume (Year): 37 (2008)
Issue (Month): 5 (October)
Pages: 1797-1802
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Handle: RePEc:eee:soceco:v:37:y:2008:i:5:p:1797-1802
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Web page: http://www.elsevier.com/locate/inca/620175
For corrections or technical questions regarding this item, or to correct its listing, contact: (Jeroen Loos).
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Keywords: Monetary policy Jealousy Consumption externality;References
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