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Monetary and Fiscal Policy in a Cash-in-advance Economy with Quasi-geometric Discounting

Daiki Maeda ()
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Daiki Maeda: Graduate School of Economics, Osaka University

No 18-31, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: In this paper, we analyze monetary and fiscal policies in a dynamic general equilibrium model in which households have a preference of quasi-geometric discounting and face a cash- in-advance constraint. From this policy analysis, we obtain the following two outcomes. First, when the government can control only the money supply, the Friedman rule is optimal. Second, when the government can also control income tax rates, the Friedman rule may not be optimal.

Keywords: Quasi-geometric discounting; Friedman rule (search for similar items in EconPapers)
JEL-codes: E21 E40 E70 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2018-11
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1831

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