TY  - BOOK
AU  - Lee Hsiu-Yun
AU  - Wang Yu-Lin
AU  - Chang Wen-Ya
TI  - Can growth-enhanced monetary policy improve welfare when people seek social status?
SN  - 09318658
AV  - HB171.5 JOU 
PY  - 2013///
CY  - Heidelberg
PB  - Springer
KW  - Wealth-enhanced social status
KW  - Production externalities
KW  - Cash-in-advance constraint
N2  - This paper examines the growth and welfare effects from an increase in the rate of money supply in an Ak type growth model with a relative wealth-enhanced social status motive, production externalities, and liquidity constraints. When only consumption is constrained by liquidity, fast money supply can hasten output growth unless seigniorage revenue is wasted and production externalities do not exist. We find that even though money growth normally promotes economic growth, it does not improve welfare when capital stock is over-accumulated. In general, an optimal monetary policy minimizes seigniorage. Our results also conclude that the optimal monetary policy rarely follows the Friedman rule
UR  - 10.1007/s00712-013-0350-8
ER  -