Is Money Net Wealth?
Abstract
This paper develops a simple monetary model, a hybrid of the Sidrauski and overlapping generation frameworks, in which new dynasties of infinitely-lived agents continuously enter the economy. It is shown that the long-run nonsuperneutrality of money in life-cycle models is a modality of the violation of the Ricardian debt neutrality proposition: the very same intergenerational redistribution effects which, on the fiscal side, are the source of debt nonneutrality are at work on the monetary side to create monetary wealth effects and make money nonsuperneutral in the long run. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.