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Decreasing marginal impatience, income distribution and demand for money: Theory and evidence

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Author Info

  • Satya P. Das

    ()
    (Indian Statistical Institute, New Delhi)

  • Mausumi Das

    ()
    (Delhi School of Economics)

  • Thomas B. Fomby

    ()
    (Southern Methodist University)

Abstract

This Paper develops a dynamic, theoretical model of demand for money under decreasing marginal impatience (DMI).Given certain conditions, the steady state is shown to be saddle-path stable and unique. It is shown that, under DMI, an increase in income inequality increases the aggregate demand for money. Empirical evidence supporting this hypothesis is provided in the context of the U.S. economy.

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File URL: http://www.isid.ac.in/~pu/dispapers/dp04-04.pdf
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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-04.

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Length: 29 pages
Date of creation: Feb 2004
Date of revision:
Handle: RePEc:ind:isipdp:04-04

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  9. Hoffman, Dennis L & Rasche, Robert H, 1991. "Long-Run Income and Interest Elasticities of Money Demand in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 665-74, November.
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