Decreasing marginal impatience, income distribution and demand for money: Theory and evidence

Satya P. Das (), Mausumi Das () and Thomas B. Fomby ()
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Satya P. Das: Indian Statistical Institute, New Delhi
Thomas B. Fomby: Southern Methodist University

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: This Paper develops a dynamic, theoretical model of demand for money under decreasing marginal impatience (DMI).Given certain conditions, the steady state is shown to be saddle-path stable and unique. It is shown that, under DMI, an increase in income inequality increases the aggregate demand for money. Empirical evidence supporting this hypothesis is provided in the context of the U.S. economy.

Pages: 29 pages
Date: 2004-02
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Persistent link: https://EconPapers.repec.org/RePEc:alo:isipdp:04-04

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