5. Krugman’s model of monetary impotence. and more here. I say if there is no representative agent, there is a game-theoretic scramble for goods in period one, following an increase in the (purely current) money supply. That said, you still shouldn’t expect the quantity equation to apply to the monetary base. Scott Sumner responds here. Empirically, the problem is to explain both Switzerland and the UK (some price inflation over five percent), not to cite one or the other. I say that depends on what the central bank/government wants, not time consistency issues by the way.