This note gives a counterexample on Reis [1]. Using a certain family of utility functions, this note not only gives a sharper representation than that of Reis but also demonstrates that interest rate inelastic money demand does not lead to superneutrality. This implies that superneutrality does not exist when uncerinty is introduced.
References
[1]
R. Reis, “The Analytics of Monetary Non-Neutrality in the Sidrauski Model,” Economics Letters, Vol. 94, No. 1, 2007, pp. 129-135. doi:10.1016/j.econlet.2006.08.017
[2]
M. Sidrauski, “The Rational Choice and Patterns of Gro- wth in a Monetary Economy,” American Economic Review, Vol. 57, No. 2, 1967, pp. 534-544.
[3]
A. Lioui and P. Poncet, “Monetary Non-Neutrality in the Sidrauski Model under Uncertainty,” Economics Letters, Vol. 100, No. 1, 2008, pp. 22-26.
doi:10.1016/j.econlet.2007.10.023
[4]
S. Fischer, “Capital Accumulation on the Transition Path in a Monetary Optimizing Model,” Econometrica, Vol. 47, No. 6, 1979, pp. 1433-1439.
doi:10.2307/1914010
[5]
R. E. Lucas Jr., “Inflation and Welfare,” Econometrica, Vol. 68, No. 2, 2000, pp. 247–274.
doi:10.1111/1468-0262.00109
