Quasi-geometric discounting in cash-in-advance economy

This paper develops a dynamic general equilibrium model in which households have a preference of quasi geometric discounting, as in Krusell et al. (2002), and face a cash-in-advance constraint. Through this extension, we show that this economy engages in over-saving, although households have present bias, and the optimal growth rate of money when there is present bias is lower than one when there is not. (C) 2018 Elsevier B.V. All rights reserved.