Money and Interest in a Cash-in-Advance Economy
AbstractIn this paper we analyze an aggregative general equilibrimi model in which the use of money is motivated by a cash-in-advance constraint, applied to purchases of a subset of consumption goods. The system is subject to both real and monetary shocks, which are economy-wide and observed by all. We develop methods for verifying the existence of, characterizing, and explicitly calculating equilibria. A main result of the analysis is that current money growth affects the current real allocation only insofar as it affects expectations about future money growth, i.e., only through its value as a signal.
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Date of creation: Oct 1987
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Some notes on Pontus Rendahlâs review of âKeensian Economicsâ
by andrew lainton in Decisions, Decisions, Decisions on 2012-12-06 11:19:51
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