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On Cash in Advance Constraints for Open Economies

Author

Listed:
  • Arman Mansoorian

    (York University, Canada)

Abstract

The implications of different cash in advance (CIA) constraints for open economies are worked out. If CIA constraints are only for consumption expenditures, changes in the rate of growth of money will have no steady state effects. If all transactions, even those involving bonds, are subject to CIA constraints, an increase in the rate of growth of money will reduce savings and steady state consumption, and have no steady state effects on capital. If investment is not subject to CIA constraints, an increase in the rate of growth of money will increase steady state capital.

Suggested Citation

  • Arman Mansoorian, 1999. "On Cash in Advance Constraints for Open Economies," Working Papers 1999_02, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:1999_02
    as

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    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/Cashadvance.pdf
    File Function: First version, 1999
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    References listed on IDEAS

    as
    1. Mansoorian, Arman, 1996. "On the Macroeconomic Policy Implications of Habit Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(1), pages 119-129, February.
    2. Stephen J. Turnovsky, 1997. "International Macroeconomic Dynamics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201119, December.
    3. Sen, Partha & Turnovsky, Stephen J., 1989. "Deterioration of the terms of trade and capital accumulation: A re-examination of the Laursen-Metzler effect," Journal of International Economics, Elsevier, vol. 26(3-4), pages 227-250, May.
    4. Obstfeld, Maurice, 1981. "Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1142-1161, December.
    5. Obstfeld, Maurice, 1981. "Capital Mobility and Devaluation in an Optimizing Model with Rational Expectations," American Economic Review, American Economic Association, vol. 71(2), pages 217-221, May.
    6. Stockman, Alan C., 1981. "Anticipated inflation and the capital stock in a cash in-advance economy," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 387-393.
    7. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Arman Mansoorian & Mohammed Mohsin, 2002. "The Employment, Investment and Current Account Effects of Exchange Rate Policies in a Cash-in-Advance Economy," Working Papers 2002_04, York University, Department of Economics.

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    More about this item

    Keywords

    Cash in Advance; Open Economies; Exchange Rates;
    All these keywords.

    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

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