Previous authors have argued that the optimal monetary policy is contractionary. If buyers value consumption substantially more than sellers, there is some randomness and informational constraints make asset trading useful, we show that there is an incentive compatible expansionary policy that dominates all incentive compatible contractionary policies.
Published in: _Journal of Economic Theory_, Vol. 54, Iss. 1, June 1991, pp. 148-164, https://doi.org/10.1016/0022-0531(91)90110-P.