Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/229882 
Year of Publication: 
2020
Citation: 
[Journal:] Journal of Mathematical Economics and Finance [ISSN:] 2458-0813 [Volume:] 6 [Issue:] 1(10) [Publisher:] Asers Publishing [Place:] Craiova [Year:] 2020 [Pages:] 19-38
Publisher: 
Asers Publishing, Craiova
Abstract: 
We augment an otherwise standard business cycle model with a richer government sector, and add a modified cash in advance considerations, and one-period-ahead nominal wage contracts. In particular, the cash in advance constraint of Cooley and Hansen (1989) is extended to include private investment and government consumption. This specification, together with the nominal wage rigidity, when calibrated to Bulgarian data after the introduction of the currency board (1999-2016), gives a role to money in propagating economic fluctuations. In addition, the combinations of these ingredients allows the framework to reproduce better observed variability and correlations among model variables, and those characterizing the labor market in particular.
Subjects: 
business cycles
modified cash-in-advance constraint
one-period nominal wage contracts
JEL: 
E32
Persistent Identifier of the first edition: 
Document Type: 
Article
Document Version: 
Published Version
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