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

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journal contribution
posted on 21.05.2021, 12:05 authored by Eric Kam
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.