Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283910 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Mathematical Economics and Finance [ISSN:] 2458-0813 [Volume:] IX [Issue:] 2(17) [Article No.:] 1 [Publisher:] ASERS Publishing [Place:] Craiova [Year:] 2023 [Pages:] 7-22
Publisher: 
ASERS Publishing, Craiova
Abstract: 
We modify an otherwise standard business cycle model with a richer government sector, and add an augmented cash-in-advance (CIA) considerations. In particular, the cash in advance constraint of Cole (2020) is extended to include private investment and government consumption, and allows a proportion of total expenditure to be done using credit. Additionally, we allow for the presence of an investment subsidy ("investment tax credit"). This specification is then calibrated to Bulgarian data after the introduction of the currency board (1999-2022), gives a role to money in accentuating economic fluctuations. In particular, the modified CIA constraint produces a mechanism that allows the framework to reproduce better observed variability and correlations among model variables, and those characterizing the labor market in particular.
Subjects: 
business cycles
augmented cash-in-advance constraint
JEL: 
E32
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)
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