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Cash-in-advance constraint with status and endogenous growth

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  • Kawagishi, Taketo
  • Kaminoyama, Ken-ichi

Abstract

This paper explores a one-sector AK model with a cash-in-advance (CIA) constraint that itself depends on relative income, which implies status (we call this constraint the “CIA-status constraint”). The CIA-status constraint means that agents with higher income are more creditworthy and can make purchases with fewer money holdings. Under the Clower-Lucas-type CIA-status constraint, we show that the endogenous growth rate and money growth are positively correlated. On the other hand, under the Stockman-type CIA-status constraint, we confirm that the relationship between the endogenous growth rate and money growth changes from negative to positive when the elasticity of the CIA constraint with respect to status exceeds one.

Suggested Citation

  • Kawagishi, Taketo & Kaminoyama, Ken-ichi, 2014. "Cash-in-advance constraint with status and endogenous growth," MPRA Paper 55946, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:55946
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    File URL: https://mpra.ub.uni-muenchen.de/55946/1/MPRA_paper_55946.pdf
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    References listed on IDEAS

    as
    1. Gong, Liutang & Zou, Heng-Fu, 2001. "Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 284-293, May.
    2. Kennickell, Arthur B & Starr-McCluer, Martha, 1997. "Household Saving and Portfolio Change: Evidence from the 1983-89 SCF Panel," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 381-399, December.
    3. Wolff, Edward N, 1983. "The Size Distribution of Household Disposable Wealth in the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(2), pages 125-146, June.
    4. Hung‐Ju Chen & Jang‐Ting Guo, 2011. "Money, Social Status And Endogenous Growth In A Generalized Cash‐In‐Advance Model," Pacific Economic Review, Wiley Blackwell, vol. 16(3), pages 267-284, August.
    5. Chang, Wen-ya & Tsai, Hsueh-fang, 2003. " Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 657-661, August.
    6. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
    7. Kessler, Denis & Wolff, Edward N, 1991. "A Comparative Analysis of Household Wealth Patterns in France and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 249-266, September.
    8. Chang, Wen-ya & Hsieh, Yi-ni & Lai, Ching-chong, 2000. "Social status, inflation, and endogenous growth in a cash-in-advance economy," European Journal of Political Economy, Elsevier, vol. 16(3), pages 535-545, September.
    9. Suen, Ming-Hon & Yip, Chong K., 2005. "Superneutrality, indeterminacy and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 579-595, December.
    10. Chen, Shu-Hua & Guo, Jang-Ting, 2008. "Velocity of money, equilibrium (in)determinacy and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1085-1096, September.
    11. Hung-Ju Chen & Jang-Ting Guo, 2009. "Social Status And The Growth Effect Of Money," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 133-141.
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    More about this item

    Keywords

    Cash-in-advance constraint; Status; Endogenous growth; Money growth;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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