Review of Economic Studies Vol. 51 No. 1 1984

Assets, General Equilibrium and the Neutrality of Money

Christophe Chamley¹; Herakles Polemarchakis²

¹ Yale University · ² Columbia University

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.

DOI

10.2307/2297709

Volume

51

Issue

1

Pages

129

Sources

openalex crossref

Cite

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