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Quasi-geometric discounting in cash-in-advance economy

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  • Maeda, Daiki

Abstract

This paper develops a dynamic general equilibrium model in which households have a preference of quasi-geometric discounting, as in Krusell et al. (2002), and face a cash-in-advance constraint. Through this extension, we show that this economy engages in over-saving, although households have present bias, and the optimal growth rate of money when there is present bias is lower than one when there is not.

Suggested Citation

  • Maeda, Daiki, 2018. "Quasi-geometric discounting in cash-in-advance economy," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 51-56.
    • Handle: RePEc:eee:mateco:v:79:y:2018:i:c:p:51-56
    DOI: 10.1016/j.jmateco.2018.09.004
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    References listed on IDEAS

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    1. Krusell, Per & Kuruscu, Burhanettin & Smith, Anthony Jr., 2002. "Equilibrium Welfare and Government Policy with Quasi-geometric Discounting," Journal of Economic Theory, Elsevier, vol. 105(1), pages 42-72, July.
    2. Graham, Liam & Snower, Dennis J., 2013. "Hyperbolic Discounting And Positive Optimal Inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 17(3), pages 591-620, April.
    3. Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, December.
    4. Liam Graham & Dennis J. Snower, 2008. "Hyperbolic Discounting and the Phillips Curve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 427-448, March.
    5. Salois, Matthew J. & Moss, Charles B., 2011. "A direct test of hyperbolic discounting using market asset data," Economics Letters, Elsevier, vol. 112(3), pages 290-292, September.
    6. Hiraguchi, Ryoji, 2014. "On the neoclassical growth model with non-constant discounting," Economics Letters, Elsevier, vol. 125(2), pages 175-178.
    7. Hiraguchi, Ryoji, 2016. "On a two-sector endogenous growth model with quasi-geometric discounting," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 26-35.
    8. Takeshi Ojima, 2018. "General Equilibrium Dynamics with Naïve and Sophisticated Hyperbolic Consumers in an Overlapping Generations Economy," Economica, London School of Economics and Political Science, vol. 85(338), pages 281-304, April.
    9. Boulware, Karl David & Reed, Robert R. & Ume, Ejindu, 2013. "Time inconsistency and the long-run effects of inflation," Economics Letters, Elsevier, vol. 120(2), pages 267-270.
    10. Hiraguchi, Ryoji, 2014. "A Note On The Analytical Solution To The Neoclassical Growth Model With Leisure," Macroeconomic Dynamics, Cambridge University Press, vol. 18(2), pages 473-479, March.
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    Cited by:

    1. Koichi Futagami & Daiki Maeda, 2022. "Naive Agents with Non-unitary Discounting Rate in a Monetary Economy," Discussion Papers in Economics and Business 21-28, Osaka University, Graduate School of Economics.
    2. Kang, Minwook & Kim, Eungsik, 2023. "A government policy with time-inconsistent consumers," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 44-67.
    3. Daiki Maeda, 2018. "Monetary and Fiscal Policy in a Cash-in-advance Economy with Quasi-geometric Discounting," Discussion Papers in Economics and Business 18-31, Osaka University, Graduate School of Economics.

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