A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy ()
Abstract
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.
Share and Cite:
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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