Banking and Money in an Extended Solow-Uzawa’s Neoclassical Growth Model

Neoclassical Growth Model

4 Quantitative Analysis 7 4.1 Steady state . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.2 Optimal saving rate at steady state . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.3 Balanced growth path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.4 Calibration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Stochastic Neoclassical Growth Model

A Simple Model of Money and Banking

This article presents a simple environment giving rise to banks that create and lend out money. We define money to be any object that circulates widely as a means of payment. In our model, this object takes the form of a fully secured and redeemable bearer bond. This monetary instrument is issued by an agent that can credibly commit to monitoring a pool of real investments; that is, this capita...

Money, credit and banking

In monetary models in which agents are subject to trading shocks there is typically an ex-post inefficiency in that some agents are holding idle balances while others are cash constrained. This inefficiency creates a role for financial intermediaries, such as banks, who accept nominal deposits and make nominal loans. We show that in general financial intermediation improves the allocation and t...

Money, Banking, and Finance