TITLE:
A Tale of Two Motives: Endogenous Time Preference, Cash-in-Advance Constraints and Monetary Policy
AUTHORS:
Eric Kam
KEYWORDS:
Time Preference; Cash-in-Advance; Tobin Effect
JOURNAL NAME:
Modern Economy,
Vol.4 No.6,
June
17,
2013
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.