Intertemporal substitution and smoothness of consumption
We prove the general existence of steady states with positive consumption in an N goods and fiat money version of the Kiyotaki-Wright (“On money as a median of exchange,” Journal of Political Economy 1989, 97 (4), 927–54) model by admitting mixed strategies. We also show that there always exists a steady state in which everyone accepts a least costly-to-store object. In particular, if fiat money is one such object, then there always exists a monetary steady state. We also establish some other properties of steady states and comment on the relationship between steady states and (incentive) feasible allocations.
Year of publication: |
1987
|
---|---|
Authors: | Christiano, Lawrence J. |
Institutions: | Federal Reserve Bank of Minneapolis |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Is consumption insufficiently sensitive to innovations in income?
Christiano, Lawrence J., (1987)
-
Chaos, sunspots, and automatic stabilizers
Christiano, Lawrence J., (1996)
-
Habit persistence, asset returns and the business cycle
Boldrin, Michele, (2000)
- More ...