Finance Papers

Document Type

Journal Article

Date of this Version

7-1985

Publication Source

Journal of Monetary Economics

Volume

16

Issue

1

Start Page

55

Last Page

71

DOI

10.1016/0304-3932(85)90006-6

Abstract

This paper analyzes the dynamic behavior of capital accumulation in Stockman's cash-in-advance model. If the cash-in-advance constraint applies only to consumption, then money is superneutral along the transition path as well as in the long run. Alternatively, if the cash-in-advance constraint applies to gross investment as well as consumption, then a permanent increase in the rate of monetary growth reduces the steady state capital stock. The effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology.

Copyright/Permission Statement

© 1985. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Embargo Date

5-7-2006

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Date Posted: 27 November 2017

This document has been peer reviewed.