Quasi-geometric discounting in cash-in-advance economy
Journal of Mathematical Economics, 2018, vol. 79, issue C, 51-56
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)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:79:y:2018:i:c:p:51-56
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