In the monetary intertemporal model, suppose the central bank issues money in exchange for capital, and rents

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In the monetary intertemporal model, suppose the central bank issues money in exchange for capital, and rents this capital out to firms each period, thus earning the market real interest rate r on the capital. Over time, as the central bank earns interest on its capital holdings, it uses these returns to retire money from the private economy. What are the long-run effects? Is the outcome economically efficient? Explain your results.

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Macroeconomics

ISBN: 978-0132991339

5th edition

Authors: Stephen d. Williamson

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