COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 605

"Asset Markets, General Equilibrium and the Neutrality of Money"

Christophe Chamley and Heracles M. Polemarchakis

September 1981

When government liabilities (including money) are held in private portfolios only as stores of value, and do not provide additional benefits (as liquidity services), the real variables in an economy with uncertainty are not affected by the government’s trading in assets. There are also policies which alter the money supply through taxes or subsidies, and affect the price of money without changing real variables.

See CFP 586