Working Paper

Superneutrality of Money under Open Market Operations

Stefan Homburg
CESifo, Munich, 2015

CESifo Working Paper No. 5219

Monetary policy is superneutral in an overlapping generations model. Previous authors have argued that superneutrality does not hold in such a setting. However, the standard results rely on the counter-factual premise of helicopter money and are overturned if money creation through open market operations is taken into account. This result suggests that a more realistic representation of monetary policy may generally be helpful.

CESifo Category
Monetary Policy and International Finance
Keywords: superneutrality, open market operations, seigniorage, monetary policy, overlapping generations
JEL Classification: E430, E520, H550