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On recursive utility and the superneutrality of money

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  • Miyazaki, Kenji

Abstract

This paper investigates whether a change in the growth rate of the money supply enhances the rate of capital accumulation in a cash-in-advance monetary model with recursive utility. Although money is superneutral in the steady state, the effect of the growth rate of money supply on the speed of capital accumulation depends not only on the curvature of the felicity, but also on the slope and curvature of the discount rate function. We find that when the discount rate decreases with consumption and the elasticity of marginal utility is greater than unity, inflation yields a slower speed of capital accumulation.

Suggested Citation

  • Miyazaki, Kenji, 2013. "On recursive utility and the superneutrality of money," Economic Modelling, Elsevier, vol. 32(C), pages 483-487.
    • Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:483-487
    DOI: 10.1016/j.econmod.2013.02.039
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    References listed on IDEAS

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    1. Hayakawa, Hiroaki, 1995. "The complete complementarity of consumption and real balances and the strong superneutrality of money," Economics Letters, Elsevier, vol. 48(1), pages 91-97, April.
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    Cited by:

    1. Hirose, K. & Ikeda, Shinsuke, 2015. "Decreasing marginal impatience destabilizes multi-country economies," Economic Modelling, Elsevier, vol. 50(C), pages 237-244.

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    More about this item

    Keywords

    Endogenous time preference; Superneutrality; Transition path; Cash-in-advance; Complementarity;
    All these keywords.

    JEL classification:

    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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