Individuals who are buffeted by stochastic shocks will wish to substitute consumption intertemporally. To effect this substitution, they can enter into insurance contracts, or they can use money. This paper investigates the connection between optimum insurance and Milton Friedman's (1969) concept of the optimum quantity of money, using a simplified version of Robert E. Lucas's (1980) pure currency economy. Monetary efficiency and efficient insurance are equivalent here. An example is presented in which an efficient monetary equilibrium exists. Contrary to Truman Bewley's (1983) conjecture, in the example, the efficient rate of return on real balances is less than the internal rate of discount. Copyright 1988 by Oxford University Press.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Article provided by Oxford University Press in its journal Economic Inquiry.
Volume (Year): 26 (1988) Issue (Month): 4 (October) Pages: 567-83 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Handle: RePEc:oup:ecinqu:v:26:y:1988:i:4:p:567-83
Contact details of provider: Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK Fax: 01865 267 985 Email: Web page: http://ei.oupjournals.org/
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)