A BEJM Topics article.

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).

Submitted: June 20, 2003 · Accepted: June 10, 2005 · Published: July 16, 2005

Originally published in Topics in Macroeconomics.

Recommended Citation

Gillman, Max K. and Yerokhin, Oleg (2005) "Ramsey-Friedman Optimality with Banking Time," Topics in Macroeconomics: Vol. 5 : Iss. 1, Article 16.
Available at: http://www.bepress.com/bejm/topics/vol5/iss1/art16