The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Superneutrality

  • Jean-Pierre Danthine
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2194

Abstract

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.

Keywords

Capital 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 Classifications

O42 O11 
This is a preview of subscription content, log in to check access.

Bibliography

  1. Akerlof, G.A., W.T. Dickens, and G.L. Perry. 1996. The macroeconomics of low inflation. Brookings Papers on Economic Activity 1996(1): 1–59.CrossRefGoogle Scholar
  2. Barro, R.J. 1996. Inflation and growth. Federal Reserve Bank of St. Louis Review 78(3): 153–169.Google Scholar
  3. Bullard, J., and J. Keating. 1995. Superneutrality in postwar economies. Journal of Monetary Economics 36: 477–496.CrossRefGoogle Scholar
  4. Cooley, T.F., and G.D. Hansen. 1989. The inflation tax in a real business cycle model. American Economic Review 79: 733–747.Google Scholar
  5. Danthine, J.-P., J. Donaldson, and L. Smith. 1987. On the superneutrality of money in a stochastic dynamic macroeconomic model. Journal of Monetary Economics 20: 475–499.CrossRefGoogle Scholar
  6. Fisher, S. 1979. Capital accumulation on the transition path in a monetary optimizing model. Econometrica 47: 1433–1439.CrossRefGoogle Scholar
  7. Goodfriend, M., and R.G. King. 1997. The new neoclassical synthesis and the role of monetary policy. In NBER macroeconomics annual, ed. B.S. Bernanke and J.J. Rotemberg. Cambridge, MA: MIT Press.Google Scholar
  8. King, R.G., and M.W. Watson. 1994. The post-war U.S. Phillips curve: A revisionist econometric history. Carnegie-Rochester Conference Series on Public Policy 41: 157–219.CrossRefGoogle Scholar
  9. McCandless, G.T. Jr., and W.E. Weber. 1995. Some monetary facts. Federal Reserve Bank of Minneapolis Quarterly Review 19(3): 2–11.Google Scholar
  10. Phelps, E. 1967. Phillips curves, expectations of inflation and optimal unemployment over time. Economica 34: 254–281.CrossRefGoogle Scholar
  11. Sidrauski, M. 1967. Rational choice and patterns of growth in a monetary economy. American Economic Review, Proceedings 57: 534–544.Google Scholar
  12. Tobin, J. 1965. Money and economic growth. Econometrica 33: 671–684.CrossRefGoogle Scholar
  13. Weiss, L. 1980. The effect of money supply on economic welfare in the steady state. Econometrica 48: 565–576.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jean-Pierre Danthine
    • 1
  1. 1.