Working Paper
Some benefits of cyclical monetary policy
Abstract: In this paper, we present a simple random-matching model in which different seasons translate into different propensities to consume and produce. We find that the cyclical creation and destruction of money is beneficial for welfare under a wide variety of circumstances. Our model of seasons can be interpreted as providing support for the creation of the Federal Reserve System, with its mandate of supplying an elastic currency for the nation.
Keywords: Monetary policy; Money supply;
https://doi.org/10.26509/frbc-wp-200511
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Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers (Old Series)
Publication Date: 2005
Number: 0511