A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy


This paper demonstrates the effects of modeling an endogenous rate of time preference and two cash-in-advance constraints. If the constraint is levied on consumption and capital goods, time preference effects are neutral and cash-in-advance constraint effects invert the Tobin Effect. If the constraint applies solely to consumption goods, opposing motives are offsetting and monetary policy is super neutral.

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E. Kam, "A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy," Modern Economy, Vol. 4 No. 6, 2013, pp. 427-430. doi: 10.4236/me.2013.46045.

Conflicts of Interest

The authors declare no conflicts of interest.


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