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CASH-IN-ADVANCE CONSTRAINT WITH STATUS AND ENDOGENOUS GROWTH

Published online by Cambridge University Press:  19 September 2017

Ken-ichi Kaminoyama  and
Taketo Kawagishi
Ken-ichi Kaminoyama
Affiliation:
Kanazawa Seiryo University
Taketo Kawagishi*
Affiliation:
Tezukayama University
*
Address correspondence to: Taketo Kawagishi, Faculty of Economics, Tezukayama University, 7-1-1 Tezukayama, Nara 631-8501, Japan; e-mail: [email protected], [email protected].
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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. This constraint is referred to in this study as the CIA-status constraint and it means that agents with higher income are more creditworthy and can make purchases with fewer money holdings. We mainly show 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.

Keywords

Cash-in-Advance ConstraintStatusEndogenous GrowthMoney Growth
Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 6 , September 2017 , pp. 1235 - 1251
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

We would like to express our profound gratitude to Jun-ichi Itaya, Koichi Kawamoto, Tarishi Matsuoka, Kazuo Mino, and two anonymous referees, who gave us helpful and valuable comments while we were writing this paper.

References

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