RIS ID
96063
Abstract
This chapter conducts a Ramsey analysis within an endogenous growth cashin-advance economy with policy commitment. Credit and money are alternative payment mechanisms that act as inputs into the household production of exchange. The credit is produced with a diminishing returns technology with Inada conditions that implies along the balanced-growth path a degree one homogeneity of effective banking time. This tightens the restrictions found within shopping time economies while providing a production basis for the Ramsey-Friedman optimum that suggests a special case of Diamond and Mirrlees (1971).
Publication Details
Gillman, M. & Yerokhin, O. (2009). Ramsey-Friedman optimality with banking time. Inflation Theory in Economics: Welfare, Velocity, Growth and Business Cycles (pp. 80-98). Abingdon, United Kingdom: Routledge.