Browsing by Subject "Limited participation"

Now showing 1 - 3 of 3

Open Access
Existence of competitive equilibrium under financial constraints and increasing returns
(Elsevier BV, 2004) Ata, H. N.; Başçı, E.
This paper studies a 'factor cost in advance' model with increasing returns in production. In the model both partial equilibrium and general equilibrium may exist since working capital of firms limit their input demand. We provide a sufficient condition for the existence of partial equilibrium of a firm operating on a non-convex choice set. Furthermore we establish the existence and uniqueness of competitive equilibrium in the special case of logarithmic utility. © 2004 Elsevier B.V. All rights reserved.
Open Access
On the importance of sequencing of markets in monetary economies
(Springer, 2003) Başçı, Erdem; Sağlam, İsmail; Sertel, M. R.; Koray, Semih
This paper studies money as working capital in a general equilibrium model. We argue that the way transactions are settled is the main determinant of the presence or lack of working capital in a cash-in-advance economy. In a production cycle, if the wage payments are made before sales proceeds are collected, firms have a financing need. This need alone brings, in a long run equilibrium, a deviation of real wages from marginal product of labor due to a ‘working capital premium’ in output prices. In contrast, if sales revenues can be collected before production costs are paid, then the working capital premium vanishes. These results are obtained in an economy with borrowing constraints, full equity financing, and optimal dividend policy.
Open Access
Optimal money growth in a limited participation model with heterogeneous agents
(2005) Başçi, E.; Saglam I.
This paper studies optimal money growth in a cash-in-advance production economy with heterogeneity in patience levels and know-how. We show that the rate of deflation suggested by the Friedman rule is limited by the subjective discount rate of the most patient agent in the economy. The output distortion due to cash-in-advance constraints on firms can completely be eliminated by means of the Friedman rule if and only if firms are run by the most patient agents. © Springer-Verlag 2005.