Money is said to be superneutral – or long-run neutral – if changes in the steady-state rate of growth of the money supply do not affect the value of real economic variables. Superneutrality depends on the hypothesis that the marginal productivity of capital is not affected by the level or the growth rate of money balances. It may hold true in steady state equilibria where the marginal utility of consumption is constant over time. Qualitatively, superneutrality is a fragile, knife-edged result that fails in a variety of contexts. Empirically, however, it is not clear that deviations from superneutrality are quantitatively significant.
KeywordsCapital accumulation Imperfect competition Inflation Labour-leisure choices Leisure Menu costs Money supply Natural rate of unemployment Neoclassical growth theory Neutrality of money New Keynesian macroeconomics Optimal growth model Phillips curve Real business cycles Structural vector autoregressions Superneutrality Uncertainty Vector autoregressions
JEL ClassificationsO42 O11
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