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A Note on Endogenous Time Preference and Monetary Non-Superneutrality

Author

Listed:
  • Eric Kam

    (York University, Canada)

  • Arman Mansoorian

    (York University, Canada)

  • John Smithin

    (York University, Canada)

Abstract

We suggest a simple variant of Uzawa preferences which has the same predictions as his formulation, but is less prone to criticism. We assume that the rate of time preference is an increasing function of the total value of current financial assets. It is shown that an increase in the rate of money growth will initially reduce the real value of financial assets, reducing the rate of time preference, increasing savings and the steady state capital stock. This provides a restatement of the Mundell-Tobin effect in an optimizing framework.

Suggested Citation

  • Eric Kam & Arman Mansoorian & John Smithin, 1998. "A Note on Endogenous Time Preference and Monetary Non-Superneutrality," Working Papers 1998_04, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:1998_04
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    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/ETPpaper.pdf
    File Function: First version, 1998
    Download Restriction: no
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    More about this item

    Keywords

    Monetary Non-Superneutrality; Time Preference; Financial Assets;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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