Is the Friedman rule optimal when money is an intermediate good?

Article Abstract:

A monetary policy rule that can give rise to very low nominal interest rates on assets with a riskless nominal return was proposed by Milton Friedman. The optimality of the rule in monetary economies where transactions need real balances and time is shown to be a general consequence in monetary models with homogeneous transaction costs functions and where alternative taxes are distortionary. It was also shown that the current results on intermediate goods taxation rules in public finance studies cannot be directly used in the given framework.

Taxation, Inflation (Finance), Inflation (Economics)

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Regime-switching debt and taxation

Article Abstract:

The studies were conducted to know the effects of changes to the tax rate with a framework where an estimated regime-switching process for the debt-output ratio is embedded in a standard growth model. The reports show that for substantial changes to policy, the impact on agents' beliefs regarding future policy can generate important nonlinear effects in their consumption and investment responses.

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The optimal mix of taxes on money, consumption and income

Article Abstract:

The optimum monetary policy should not tax money like income tax, consumption tax or both. The Friedman rule is optimal since it uses an optimal mix of taxes on money, consumption and income.

United States, Consumption (Economics)

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