Advanced Search
MyIDEAS: Login to save this article or follow this journal

Monopolistic competition, overlapping generations, and the role of monetary policy

Contents:

Author Info

  • Roberto Chang

    (New York University, USA)

Abstract

This paper studies a simple overlapping generations model (OGM) with monopolistic competition in goods markets. I show that the set of rational expectations equilibria of the model can be characterized by a simple difference equation in the real quantity of money, in the same way as the standard, competitive OGM. The monopolistic competition case results, however, in less output, consumption, and lower welfare relative to the competitive case. The model is then used to reexamine some issues of monetary policy. Previous studies have stressed that the existence of imperfect competition in goods markets may justify activist monetary policy. I show that this rationale for policy intervention remains true in dynamic models, although transmissions mechanisms and policy prescriptions turn out to be very different. This is shown by discussing the effectiveness of monetary policy, the optimal quantity of money, and the welfare cost of inflationary finance.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://taloustieteellinenyhdistys.fi/images/stories/fep/f1991_1c.pdf
Download Restriction: no

Bibliographic Info

Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

Volume (Year): 4 (1991)
Issue (Month): 1 (Spring)
Pages: 24-32

as in new window
Handle: RePEc:fep:journl:v:4:y:1991:i:1:p:24-32

Contact details of provider:
Web page: http://www.taloustieteellinenyhdistys.fi
More information through EDIRC

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:fep:journl:v:4:y:1991:i:1:p:24-32. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Editorial Secretary).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.