Consider a simple monetary model based on Andolfatto (2008) with over- lapping generations where agents Iive for only two periods (young and old). There is no population growth and each generation consists of N individuals. The young can produce output y via 3/ = 2(1 l) where z is technology and l' is leisure. The old only value consumption while the original old have money mt. which can be carried over into the next period. The young value only leisure. The representative agent's lifetime budget constraint can then be written as (10 2 C : l_'t+1 |'|,+1 denotes the expected gross inflatiOn rate (equal to the gross growth rate of the money supply in equilibrium). Assume that the representative agent's utility function is given by U = C + I\" for 0