Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229881
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2020
Citation: 
[ISBN:] IUP Journal of Applied Economics [ISSN:] 0972-6861 [Issue:] 4 (forthcoming) [Pages:] 47-59
Abstract: 
We augment an otherwise standard business cycle model with a richer government sector, and add a modified 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. This specification is then calibrated to Bulgarian data after the introduction of the currency board (1999-2018), 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
modified cash-in-advance (CIA) constraint
Bulgaria
JEL: 
E32
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)

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