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dc.contributor.authorDixon, Huwen_US
dc.contributor.authorPourpourides, Panayiotis M.en_US
dc.description.abstractWe depart from the assumption of perfect competition in the final goods sector, commonly used in cash-in-advance (CIA) models, providing extensive theoretical analysis of the general equilibrium of an economy with imperfect competition, endogenous production and fully flexible prices in the presence of occasionally binding CIA constraints, under general assumptions about the velocity of money. Homothetic preferences generate Marshallian demands which are linear in own price allowing for any combination of equilibrium number of firms and demand elasticity. Whether the CIA constraint binds or not depends, among others, on the degree of imperfect competition. As the market becomes more competitive it is certainly no less likely that the CIA constraint will bind. The degree of imperfect competition directly affects the distribution of consumption and indirectly the level of output and work effort via the CIA constraint. With perfect foresight, there is an optimal negative steady-state inflation rate. We also consider how the introduction of capital and bonds would fit into the framework.en_US
dc.publisher|aCardiff University, Cardiff Business School |cCardiffen_US
dc.relation.ispartofseries|aCardiff Economics Working Papers |xE2012/3en_US
dc.subject.keywordgeneral equilibriumen_US
dc.subject.keywordmonopolistic competitionen_US
dc.subject.keywordimperfect competitionen_US
dc.subject.keywordmoney velocityen_US
dc.titleOn imperfect competition with occasionally binding cash-in-advance constraintsen_US
dc.typeWorking Paperen_US

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