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Abstract:
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Fischer (1979) and Asako (1983) analyze the sign of the correlation between the growth rate of
money and the rate of capital accumulation on the transition path. Both plug a CRRA utility
(based on a Cobb-Douglas and a Leontief function, respectively) into Sidrauski's model - yet
return contrasting results. The present analysis, by using a more general CES utility, presents both
of those settings and conclusions as limiting cases, and generates economic gures more consistent
with reality (for instance, the interest-rate elasticity of the money demands derived from those
previous works is necessarily 1 and 0, respectively).
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