Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model: Comment

Wen-ya Chang and Hsueh-fang Tsai

Journal of Money, Credit and Banking, 2003, vol. 35, issue 4, 657-61

Abstract: Using Gong and Zou's (2001) model, we reexamine the steady-state effect of monetary growth on the capital stock in the presence of a wealth-induced social status. We find that inflation negatively affects the long-run capital stock if all investment and consumption goods are liquidity constrained. Moreover, if all consumption goods and a faction of investment goods are liquidity constrained, inflation has an uncertain effect on the long-run capital stock, depending on the extent of the desire for a wealth-induced social status. These results stand in contrast to those of Gong and Zou (2001).

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:35:y:2003:i:4:p:657-61

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