Learning-by-doing and the optimal Ramsey interest rate

We add learning-by-doing to firms technology in an imperfectly competitive Ramsey model and study optimal interest rate. Our main result is that the Ramsey allocation features an inverse relationship between optimal nominal interest rate and the degree of learning rate. We show that a sufficiently high degree of learning rate can reinstate the optimality of the Friedman rule.

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Year of publication:	2015-03-11
Authors:	Talukdar, Bidyut
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 35.2015, 1, p. 53-60
Publisher:	AccessEcon
Subject:	learning-by-doing \| organizational capital \| Ramsey model \| optimal policy

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Extent:	application/pdf
Type of publication:	Article
Classification:	E0 - Macroeconomics and Monetary Economics. General ; E4 - Money and Interest Rates
Source:	RePEc - Research Papers in Economics

Persistent link: https://ebvufind01.dmz1.zbw.eu/10011199660