CASH-IN-ADVANCE CONSTRAINT WITH STATUS AND ENDOGENOUS GROWTH

Ken-ichi Kaminoyama and Taketo Kawagishi

Macroeconomic Dynamics, 2017, vol. 21, issue 6, 1235-1251

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.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:21:y:2017:i:06:p:1235-1251_00

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