Kaminoyama, Ken-ichi and Kawagishi, Taketo (2012): Cash-in-advance constraint with status in a neoclassical growth model.
Download (95kB) | Preview
In this paper, we assume that a cash-in-advance (CIA) constraint itself depends on relative income, which implies status. This constraint means that agents with higher income are more creditworthy and can make purchases with fewer money holdings. Under this assumption, we construct a one-sector neoclassical growth model and show that there exists a unique steady state that has saddle-path stability without specifying each function. Furthermore, we examine the effects of money growth on capital accumulation. If the status elasticity of CIA constraint is large, the Tobin effect can arise. In contrast, if it is small, the anti-Tobin effect can arise.
|Item Type:||MPRA Paper|
|Original Title:||Cash-in-advance constraint with status in a neoclassical growth model|
|Keywords:||Cash-in-advance constraint; Status; Money growth; Neoclassical growth model; Tobin/anti-Tobin effect|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
|Depositing User:||Ken-ichi Kaminoyama|
|Date Deposited:||27. Apr 2012 00:11|
|Last Modified:||10. Sep 2015 12:34|
Avery, R., Elliehausen, G., Kennickell, A., 1987. Changes in the use of transaction accounts and cash from 1984 to 1986. Federal Reserve Bulletin 73, 179-195.
Chang, W.Y., Hsieh, Y.N., Lai, C.C., 2000. Social status, inflation and endogenous growth in a cash-in-advance economy. European Journal of Political Economy 16, 535-545.
Chang, W.Y., Tsai, H.F., 2003. Money, social status, and capital accumulation in a cash-in-advance model: a comment. Journal of Money, Credit and Banking 35, 657-661.
Clower, R.W., 1967. A reconsideration of the microfoundations of money. Western Economic Journal 6, 1-8.
Cole, H.L., Mailath, G.J., Postlewaite, A., 1992. Social norms, savings behavior, and growth. The Journal of Political Economy 100, 1092-1125.
Gong, L., Zou, H.F., 2001. Money, social status, and capital accumulation in a cash-in-advance model. Journal of Money, Credit and Banking 33, 284-293.
Kennickell, A., Starr-McCluer, M., 1996. Household Saving and Portfolio Change: Evidence from the 1983-1989 SCF Panel.” Finance and Economics Discussion Series 18, Division of Monetary Affairs, Federal Reserve Board, Washington, DC.
Kessler, D., Wolff, E., 1991. A comparative analysis of household wealth patterns in France and the United States. Review of Income and Wealth 37, 249-266.
Kurz, M., 1968. Optimal economic growth and wealth effects. International Economic Review 9, 348-357.
Lucas, R.E., 1980. Equilibrium in a pure currency economy. Economic Inquiry 18, 203-220.
Stockman, A.C., 1981. Anticipated inflation and the capital stock in a cash-in-advance economy. Journal of Monetary Economics 8, 387-393.
Tobin, J., 1965. Money and economic growth. Econometrica 33, 671-684.
Weber, M., 1958. The protestant ethic and the spirit of capitalism. Charles Scribner’s Sons, New York.
Wolff, E., 1983. The size distribution of household disposable wealth in the united states. Review of Income and Wealth 29, 125-146.
Zou, H.F., 1994. ‘The spirit of capitalism’ and long-run growth. European Journal of Political Economy 10, 279-293.