Bloise, Gaetano Currarini, Sergio Kikidis, Nicholas
Year of Publication:
Nota di Lavoro, Fondazione Eni Enrico Mattei 12.2001
In this paper we study the welfare effects of monetary policy in a simple overlapping generation economy in which agents voluntarily contribute to a public good. Inflation has two effects at equilibrium: it increases voluntary contributions and it misallocates private consumption across time. We show that the aggregate effect is welfare-improving for "not too large" inflation rates. Moreover, there exists an optimal inflation rate.
Optimal inflation public goods voluntary contributions