Money-Consumption Substitution and Capital Accumulation on the Transition Path: Some Numerical Results

In a recent contribution Villieu [1992] extends the Sidrauski-Fischer model, considering various degrees of substitution between consumption and real money balances. He is able to characterise analytically the portions of the parameters space that imply an "anti-Tobin" effect. This paper shows, by means of numerical methods, that the procedure used by Villieu to prove his result is biased when the elasticity of substitution between consumption and real money balances is low.