Dynamic Behavior of Capital Accumulation in a Cash-in-Advance Model

Andrew Abel

No 1549, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the dynamic behavior of capital accumulationin Stockman's (1981) cash-in-advance model. If the cash-in-advance constraint applies only to consuittion, then money is superneutral along the transition path as well as in the long run. Alternatively, if the cash-in-advance constraint applies to gross investment as well as consumption, then a permanent increase in the rate of monetary growth reduces the steady state capital stock. The effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology.

Date: 1985-01
Note: EFG
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Citations: View citations in EconPapers (97)

Published as Abel, Andrew B. "Dynamic Behavior of Capital Accumulation in a Cash-in-Advance Model," Journal of Monetary Economics, Vol. 16, No. 1, July 1985, pp. 55-71.

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Journal Article: Dynamic behavior of capital accumulation in a cash-in-advance model (1985)
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