Assets, General Equilibrium and the Neutrality of Money
- 1 January 1984
- journal article
- Published by Oxford University Press (OUP) in The Review of Economic Studies
- Vol. 51 (1) , 129-138
- https://doi.org/10.2307/2297709
Abstract
When government liabilities (including money) are held in private portfolios only as stores of value and do not provide additional services (such as liquidity), real variables are not affected by changes in the money supply due to the government's trading in real assets (open market operations). This neutrality of monetary policy fails if the government either trades in nominal assets, or it distributes subsidies and levies taxes.Keywords
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