NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Implementing the Friedman Rule

Peter N. Ireland

NBER Working Paper No. 8821
Issued in March 2002
NBER Program(s):   ME

In cash-in-advance models, necessary and sufficient conditions for the existence of an equilibrium with zero nominal interest rates and Pareto optimal allocations place restrictions mainly on the very long-run, or asymptotic, behavior of the money supply. When these asymptotic conditions are satisfied, they leave the central bank with a great deal of flexibility to manage the money supply over any finite horizon. But what happens when these asymptotic conditions fail to hold? This paper shows that the central bank can still implement the Friedman rule if its actions are appropriately constrained in the short run.

download in pdf format
   (190 K)

email paper

This paper is available as PDF (190 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8821

Published: Ireland, Peter N. "Implementing The Friedman Rule," Review of Economic Dynamics, 2003, v6(1,Jan), 120-134. citation courtesy of

Users who downloaded this paper also downloaded these:
Mulligan and Sala-i-Martin w5954 The Optimum Quantity of Money: Theory and Evidence
Nelson and Schwartz w13546 The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's "Who Was Milton Friedman?"
Chari, Christiano, and Kehoe w4443 Optimality of the Friedman Rule in Economies with Distorting Taxes
Schmitt-Grohe and Uribe w16054 The Optimal Rate of Inflation
Barro w5502 Reflections on Ricardian Equivalence
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us