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A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy

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DOI: 10.4236/me.2013.46045    5,138 Downloads   6,473 Views   Citations
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ABSTRACT

This paper demonstrates the effects of modeling an endogenous rate of time preference and two cash-in-advance constraints. If the constraint is levied on consumption and capital goods, time preference effects are neutral and cash-in-advance constraint effects invert the Tobin Effect. If the constraint applies solely to consumption goods, opposing motives are offsetting and monetary policy is super neutral.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

E. Kam, "A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy," Modern Economy, Vol. 4 No. 6, 2013, pp. 427-430. doi: 10.4236/me.2013.46045.

References

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