Eric Kam (York University, Canada) Arman Mansoorian (York University, Canada) John Smithin (York University, Canada)
Abstract
We suggest a simple variant of Uzawa preferences which has the same predictions as his formulation, but is less prone to criticism. We assume that the rate of time preference is an increasing function of the total value of current financial assets. It is shown that an increase in the rate of money growth will initially reduce the real value of financial assets, reducing the rate of time preference, increasing savings and the steady state capital stock. This provides a restatement of the Mundell-Tobin effect in an optimizing framework.
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Publisher Info
Paper provided by York University, Department of Economics in its series Working Papers with number
1998_04.
Find related papers by JEL classification: F31 - International Economics - - International Finance - - - Foreign Exchange F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics