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Quasi-geometric discounting in cash-in-advance economy

Daiki Maeda

Journal of Mathematical Economics, 2018, vol. 79, issue C, 51-56

Abstract: This paper develops a dynamic general equilibrium model in which households have a preference of quasi-geometric discounting, as in Krusell et al. (2002), and face a cash-in-advance constraint. Through this extension, we show that this economy engages in over-saving, although households have present bias, and the optimal growth rate of money when there is present bias is lower than one when there is not.

Keywords: Quasi-geometric discounting; Time-inconsistency; Cash-in-advance (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.jmateco.2018.09.004

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