Wealth effects in a cash-in-advance economy

Wealth effects in a cash-in-advance economy

A note on cash-in-advance constraints in continuous time

This paper demonstrates a robust proof of the continuous-time transformations of Stockman's cash-in-advance constraints. When the constraint applies to consumption and capital purchases, monetary growth lowers steady state consumption and capital. When the constraint applies only to consumption purchases, monetary growth is superneutral.

A note on cash-in-advance constraints in continuous time

This paper demonstrates a robust proof of the continuous-time transformations of Stockman's cash-in-advance constraints. When the constraint applies to consumption and capital purchases, monetary growth lowers steady state consumption and capital. When the constraint applies only to consumption purchases, monetary growth is superneutral.

A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy

This paper demonstrates the effects of modeling an endogenous rate of time preference and two cash-in-advance constraints. If the constraint is levied on consumption and capital goods, time preference effects are neutral and cash-in-advance constraint effects invert the Tobin Effect. If the constraint applies solely to consumption goods, opposing motives are offsetting and monetary policy is super neutral.

A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy

This paper demonstrates the effects of modeling an endogenous rate of time preference and two cash-in-advance constraints. If the constraint is levied on consumption and capital goods, time preference effects are neutral and cash-in-advance constraint effects invert the Tobin Effect. If the constraint applies solely to consumption goods, opposing motives are offsetting and monetary policy is super neutral.

Time-inconsistent discounting and the Friedman rule: roles of non-unitary discounting

We examine the optimality of the Friedman rule by considering recent development of behavioral economics. We construct a simple macroeconomic model where agents discount consumption and leisure at different rates. We also consider a standard exponential discounting model and a hyperbolic discounting model, by assuming that the same discounting applies to both consumption and leisure. Money is introduced via a cash-in-advance constraint. Although the three models are observationally equivalent, they provide different policy implications. The Friedman rule is optimal in the latter two models, while it is not optimal in the first model if agents discount consumption is at a higher rate than leisure.

Liquidity Traps and Monetary Policy: Managing a Credit Crunch

We study a model with heterogeneous producers that face collateral and cash-in-advance constraints. A tightening of the collateral constraint results in a credit-crunch-generated recession that reproduces some features of the financial crisis that unraveled in 2007 in the United States. We use the model to study the effects, following a credit crunch, of alternative monetary and fiscal policies. (JEL E31, E44, E52, E62, G01, H63)

A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria

A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria