Miao, Jianjun; Xie, Danyang - In: Journal of Economic Dynamics and Control 37 (2013) 1, pp. 84-103
Empirical and experimental evidence documents that money illusion is persistent and widespread. This paper incorporates money illusion into a stochastic continuous-time monetary model of endogenous growth. We model an agent's money illusion behavior by assuming that he maximizes nonstandard...