A Comment on Reis

Abstract

This note gives a counterexample on Reis [1]. Using a certain family of utility functions, this note not only gives a sharper representation than that of Reis but also demonstrates that interest rate inelastic money demand does not lead to superneutrality. This implies that superneutrality does not exist when uncerinty is introduced.

KeywordsMonetary PolicySuperneutralityNominal Interest Rate PolicyPerfect Complementary between Consumption and Money

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