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Illustrate the quantity theory of money

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Reference no: EM133202892

Consider the stationary equilibrium of the overlapping generations model with ?at money when the population is constant.

a) Starefully setting up the budget constraints, characterize the equilibrium of the money market and derive an expression for the rate of return of ?at money in equilibrium.

b) Use this model to illustrate the quantity theory of money.

c) Suppose there is an additional asset in the economy, priyate leans. Discuss whether in equilibrium ?at money and private leans can coexist.

Reference no: EM133202892

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