<p>The Sidrauski model is equivalent to a model with 2 consumption goods where the second good (money) is produced costlessly by the government. Inflation is equivalent to raising the price of the second good. Money is super-neutral if this does not affect the real allocation (demand for the first good). This only happens when preferences are separable.</p>

CC BY-SA 4.0
2021-02-21T14:34:53.550Z
2021-02-21T14:34:53.550Z
LutzHendricks
<p>In the Sidrausk model, money is in the long run super neutral.</p>
<p>Does this result only apply to the case where money and consumption are separable in the utility function, or also to the case where they are non separable.</p>

<monetary-policy><long-run>
Sidrauski Monetary Model and Neutrality
user32506
# Sidrauski Monetary Model and Neutrality

(Asked by: username_0 on 2021-02-18)

In the Sidrausk model, money is in the long run super neutral.

Does this result only apply to the case where money and consumption are separable in the utility function, or also to the case where they are non separable.

**Tags:** monetary-policy, long-run

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## 1 answers

### Answer by username_1 on 2021-02-21. Score: 1

The Sidrauski model is equivalent to a model with 2 consumption goods where the second good (money) is produced costlessly by the government. Inflation is equivalent to raising the price of the second good. Money is super-neutral if this does not affect the real allocation (demand for the first good). This only happens when preferences are separable.


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