FRB: Money, Interest, and Capital in a Cash-In-Advance Economy

International Finance Discussion Papers

Money, Interest, and Capital in a Cash-In-Advance Economy
Wilbur John Coleman II
1988-323 (May 1988)

Abstract: A cash-in-advance constraint on consumption is incorporated into a standard model of consumption and capital accumulation. Monetary policy consists of lump-sum cash transfers. Methods are developed for establishing the existence and uniqueness of an equilibrium. and for explicitly constructing this equilibrium. The model economy's dependence on monetary policy is explored.

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