A business-cycle model with cash- and credit goods and a modified cash-in-advance feature: lessons for Bulgaria (1999-2020)

Artikel

We augment the standard business cycle model with cash and credit goods a la Lucas and Stokey (1983, 1987), plus a modified cash-in-advance (CIA) considerations. In particular, the cash-in-advance constraint is extended to include private investment and government purchases. This specification is then calibrated to Bulgaria over the 1999-2020 period. The presence of cash and credit goods give a role to money in accentuating economic fluctuations. In particular, the two types of goods and the modified CIA constraint produce a more sophisticated propagation mechanism, with novel trade-offs faced by the household. The model generates too volatile consumption, and counter-cyclical investment, which are at serious odds with data. Overall, the model with cash and credit goods, and physical capital accumulation, does not provide a good framework to study business cycle fluctuations in Bulgaria.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Econometrics. Ekonometria: Advances in Applied Data Analysis ; ISSN: 2449-9994 ; Volume: 26 ; Year: 2022 ; Issue: 1 (forthcoming) ; Pages: 1-13 ; Warsaw: Sciendo

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles
• Subject: business cycles ; cash and credit goods ; modified cash-in-advance (CIA) constraint ; Bulgaria

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Vasilev, Aleksandar
• Event: Veröffentlichung
• (who): Sciendo ; ZBW – Leibniz Information Centre for Economics
• (where): Warsaw
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/251944
• Last update: 10.03.2025, 11:42 AM CET