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CASH-IN-ADVANCE CONSTRAINT WITH STATUS AND ENDOGENOUS GROWTH

  • Ken-ichi Kaminoyama (a1) and Taketo Kawagishi (a2)
Abstract

This paper explores a one-sector AK model with a cash-in-advance (CIA) constraint that itself depends on relative income, which implies status. This constraint is referred to in this study as the CIA-status constraint and it means that agents with higher income are more creditworthy and can make purchases with fewer money holdings. We mainly show that the relationship between the endogenous growth rate and money growth changes from negative to positive when the elasticity of the CIA constraint with respect to status exceeds one.

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Corresponding author
Address correspondence to: Taketo Kawagishi, Faculty of Economics, Tezukayama University, 7-1-1 Tezukayama, Nara 631-8501, Japan; e-mail: tkawagishi@tezukayama-u.ac.jp, tkt.kawagishi@gmail.com.
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We would like to express our profound gratitude to Jun-ichi Itaya, Koichi Kawamoto, Tarishi Matsuoka, Kazuo Mino, and two anonymous referees, who gave us helpful and valuable comments while we were writing this paper.

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References
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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