Date of this Version
Journal of Monetary Economics
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.
© 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/
Abel, A. B. (1985). Dynamic Behavior of Capital Accumulation in a Cash-in-Advance Model. Journal of Monetary Economics, 16 (1), 55-71. http://dx.doi.org/10.1016/0304-3932(85)90006-6
Date Posted: 27 November 2017
This document has been peer reviewed.