Parametrization of model consistant expectations in the Sidrauski model

This paper discusses a cubic parametrisation of model consistent expectations in a nonlinear dynamic monetary growth model. The so-called Sidrauski model links money, inflation and consumption growth. Iterative least squares combined with simulation is used to address the alleged impact of inflation on consumption growth. It is shown that an increase in especially long-run inflation variability affects the density functions of both consumption and real money balances.