Optimality of the Friedman rule in economies with distorting taxes

Varadarajan Chari, Lawrence Christiano and Patrick Kehoe

No 158, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We find conditions for the Friedman rule to be optimal in three standard models of money. These conditions are homotheticity and separability assumptions on preferences similar to those in the public finance literature on optimal uniform commodity taxation. We show that there is no connection between our results and the result in the standard public finance literature that intermediate goods should not be taxed.

Keywords: Taxation; Monetary policy; Interest rates (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Optimality of the Friedman rule in economies with distorting taxes (1996)
Working Paper: Optimality of the Friedman Rule in Economies with Distorting Taxes (1993)
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