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A Comment on Reis

DOI: 10.4236/tel.2011.13019, PP. 91-94

Keywords: Monetary Policy, Superneutrality, Nominal Interest Rate Policy, Perfect Complementary between Consumption and Money

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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.


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[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


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