Quellenangabe:
[ISSN:] 0972-6861 [Issue:] 4 (forthcoming) [Publisher:] IUP Publications [Place:] Hyderabad, Telangana, India [Year:] 2020 [Pages:] 47-59
Verlag:
IUP Publications, Hyderabad, Telangana, India
Zusammenfassung:
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.