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Inflation, Growth, and Impatience in a Generalized Cash-in-Advance Economy

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  • Kenji Miyazaki

Abstract

In this note, we consider a cash-in-advance (CIA) economy in which the CIA constraint applies to not only consumption but also to all or part of investment and where the discounting rate is a function of consumption. We use this economy to investigate the effects of monetary growth on capital, money, consumption, and welfare. We find that as long as the condition assuring the uniqueness of the steady state holds, the effect of monetary growth on all of these variables is negative, though mitigated by the positive slope of the discounting function. Using this result, we establish a qualitative equivalence between the money-in-the-utility, transaction-cost, and CIA models.

Suggested Citation

  • Kenji Miyazaki, 2012. "Inflation, Growth, and Impatience in a Generalized Cash-in-Advance Economy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 3(3), pages 2-7, July.
    • Handle: RePEc:jfr:ijfr11:v:3:y:2012:i:3:p:2-7
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    References listed on IDEAS

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    4. Been-Lon Chen & Mei Hsu & Chia-Hui Lu, 2008. "Inflation and Growth: Impatience and a Qualitative Equivalence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(6), pages 1309-1323, September.
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    Cited by:

    1. Wei-Bin Zhang, 2014. "National and International Inequalities in Income and Wealth in a Global Growth with Free Trade and National Inflation Policies," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 22-40, May.

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