Document Type
Journal Article
RIS ID
25679
Citation
Gillman, Max K. and Yerokhin, Oleg, 2005, Ramsey-Friedman optimality with banking time, Topics in Macroeconomics, 5(1), 1-24.
http://ro.uow.edu.au/era/2112
Abstract
This paper conducts a Ramsey analysis within an endogenous growth cash-in-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).