COMMENTS ON 'NOMINAL BONDS AND INTEREST RATES' BY SHOUYONG SHI

摘要

Shi has written a very interesting and useful article. His approach of assuming that goods and bond markets are separated is a reasonable approach to getting government bonds to have a positive interest rate even though they are default risk free. In this sense he has built a satisfactory model of a monetary economy. Further, he obtains an interesting result about the necessity of decentralized tradefor getting matured bonds not to circulate, and he has performed some interesting policy experiments with the model. My one complaint is that I wish that government bonds had been essential in the model. At the end, I was left wondering why in his model the government would want to make agents worse off by issuing bonds.