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Money, Tobin Effect, and Incerasing Returns

  • Basci, Erdem
  • Erdogan, Ayse M.
  • Saglam, Ismail

This paper shows that unregulated decentralized equilibrium is viable under increasing returns technologies in an overlapping generations model of production with cash-in-advance constraints. We also demonstrate that the model exhibits both the Tobin effect and the reverse Tobin effect.

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File URL: http://mpra.ub.uni-muenchen.de/1904/1/MPRA_paper_1904.pdf
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File URL: http://mpra.ub.uni-muenchen.de/1917/1/MPRA_paper_1917.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1904.

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Date of creation: Sep 2006
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Handle: RePEc:pra:mprapa:1904
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  1. Crettez, Bertrand & Michel, Philippe & Wigniolle, Bertrand, 1999. "Cash-in-Advance Constraints in the Diamond Overlapping Generations Model: Neutrality and Optimality of Monetary Policies," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 431-52, July.
  2. Fuerst, Timothy S., 1992. "Liquidity, loanable funds, and real activity," Journal of Monetary Economics, Elsevier, vol. 29(1), pages 3-24, February.
  3. Erdem Basci & Ismail Saglam, 2001. "Bertrand-Edgeworth Equilibrium in a Cash-Advance Economy," Working Papers 0104, Department of Economics, Bilkent University.
  4. Erdem Basai & Ismail Saglam, 2003. "Bertrand-Edgeworth equilibrium in a cash-in-advance economy," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 679-695, October.
  5. Vohra, Rajiv, 1992. "Marginal Cost Pricing under Bounded Marginal Returns," Econometrica, Econometric Society, vol. 60(4), pages 859-76, July.
  6. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1996. "Sticky Price and Limited Participation Models of Money: A Comparison," NBER Working Papers 5804, National Bureau of Economic Research, Inc.
  7. Guesnerie, Roger, 1975. "Pareto Optimality in Non-Convex Economies," Econometrica, Econometric Society, vol. 43(1), pages 1-29, January.
  8. Carlstrom, Charles T. & Fuerst, Timothy S., 1995. "Interest rate rules vs. money growth rules a welfare comparison in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 247-267, November.
  9. Robert E. Lucas, Jr. & Nancy L. Stokey, 1985. "Money and Interest in a Cash-in-Advance Economy," NBER Working Papers 1618, National Bureau of Economic Research, Inc.
  10. Ghossoub, Edgar A & Reed, Robert R, 2005. "Money and Specialization in a Neoclassical Growth Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(5), pages 969-75, October.
  11. Thomas F. Cooley & Gary D. Hansen, 1987. "The Inflation Tax in a Real Business Cycle Model," UCLA Economics Working Papers 496, UCLA Department of Economics.
  12. Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-20, April.
  13. Erdem Basci & Ismail Saglam, 2000. "Optimal Money Growth in A Limited Particpation Model with Heterogenous Agents," Working Papers 0004, Department of Economics, Bilkent University.
  14. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1997. "Modeling money," Working Paper Series, Macroeconomic Issues WP-97-17, Federal Reserve Bank of Chicago.
  15. Lucas, Robert E., 1984. "Money in a theory of finance," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 21(1), pages 9-46, January.
  16. Erdogan, Ayse M. & Saglam, Ismail, 2006. "Monetary policy determines the long-run Phillips curve: An OLG model of production with cash-in-advance constraints," Economic Modelling, Elsevier, vol. 23(2), pages 308-315, March.
  17. Khan, M Ali & Vohra, Rajiv, 1987. "An Extension of the Second Welfare Theorem to Economies with Nonconvexities and Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 223-41, May.
  18. Drazen, Allan, 1981. "Inflation and capital accumulation under a finite horizon," Journal of Monetary Economics, Elsevier, vol. 8(2), pages 247-260.
  19. Brown, Donald J & Heal, Geoffrey M, 1983. "Marginal vs. Average Cost Pricing in the Presence of a Public Monopoly," American Economic Review, American Economic Association, vol. 73(2), pages 189-93, May.
  20. Beato, Paulina, 1982. "The Existence of Marginal Cost Pricing Equilibria with Increasing Returns," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 669-88, November.
  21. Vohra, Rajiv, 1988. "On the existence of equilibria in economies with increasing returns," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 179-192, April.
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