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Author:Haslag, Joseph H. 

Journal Article
Monetary policy arithmetic: some recent contributions

Sargent and Wallace (1981) study the feasibility of a bond-financed increase in government spending. In their "unpleasant monetarist arithmetic," Sargent and Wallace show how using bonds to finance a permanent deficit today may necessitate faster money growth in the future, yielding higher inflation today. The logic behind this spectacular result is predicated on the satisfaction of one crucial condition: the real interest rate offered on bonds has to exceed the real growth rate of the economy. Joydeep Bhattacharya and Joseph Haslag review some recent contributions to the literature on ...
Economic and Financial Policy Review , Issue Q III , Pages 26-36

Journal Article
The FOMC IN 1987: the effects of a falling dollar and the stock market collapse

Review , Issue Mar

Working Paper
Specialization and the effects of transactions costs on equilibrium exchange

Working Papers , Paper 9703

Report
The Tobin effect and the Friedman rule

This paper addresses whether the Friedman rule can be optimal in an economy in which the Tobin effect is operative. We present an overlapping generations economy with capital in which limited communication and stochastic relocation create an endogenous transaction role for fiat money. We assume a production function with a knowledge externality (Romer-style) that nests economies with endogenous growth (AK form) and those with no long-run growth (the Diamond model). With logarithmic utility, the "anti-Tobin effect" is operative, and the Friedman rule is optimal (that is, ...
Staff Reports , Paper 224

Working Paper
Optimality of the Friedman rule in overlapping generations model with spatial separation

Recent papers suggest that when intermediation is analyzed seriously, the Friedman rule does not maximize social welfare in overlapping generations model in which money is valued because of spatial separation and limited communication. These papers emphasize a trade-off between productive efficiency and risk sharing. We show financial intermediation or a trade-off between productive efficiency and risk sharing are neither necessary nor sufficient for that result. We give conditions under which the Friedman rule maximizes social welfare and show any feasible allocation such that money grows ...
Research Working Paper , Paper RWP 03-03

Working Paper
On the optimality of interest-bearing reserves in economies of overlapping generations

Working Papers , Paper 9328

Journal Article
Seigniorage revenue and monetary policy: some preliminary evidence

Producing new money is inexpensive, making seigniorage--the revenues earned from creating new money--attractive. However, the social costs of faster money creation most likely are greater than the production costs. These marginal social costs may put limits on how much real seigniorage revenue the government can earn. In this article, Joseph Haslag looks across countries to assess the typical reliance on seigniorage revenue. In addition, Haslag determines whether countries with combinations of high rates of money growth and high reserve requirements tend to rely especially heavily on ...
Economic and Financial Policy Review , Issue Q III , Pages 10-20

Working Paper
Nominal GNP growth and adjusted reserve growth: nonnested tests of the St. Louis and Board measures

Working Papers , Paper 8914

Working Paper
The monetary policy effects on seigniorage revenue in a simple growth model.

Working Papers , Paper 9601

Journal Article
Output, growth, welfare, and inflation: a survey

In this article, Joseph Haslag surveys both the theoretical results and the empirical evidence relating inflation to per capita real GDP growth. Theory yields mixed results: a permanent change in inflation can raise, lower, or have no impact on per capita output or its rate of growth. The crucial factor seems to be the role money plays in the model economy. However, in most cases, a permanent increase in inflation lowers the average person's welfare. The empirical evidence is similarly inconclusive. A body of evidence suggests that high-inflation countries do grow more slowly than ...
Economic and Financial Policy Review , Issue Q II , Pages 11-21

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