Superneutrality and Indeterminacy in a Cash-in-Advance Economy with Endogenous Labor Supply

This paper examines the impact of introducing endogenous labor supply and leisure externality into a cash-in-advance economy with one sector endogenous growth. We find that money is not superneutral in the growth-rate sense. An increasen the nominal money growth rate raises inflation and leisureonsuming. Moreover, the equilibrium employment, the growth rate of national income, and the equilibrium capital rental rate will decrease at the same time. In addition, equilibrium indeterminacy arises if the intensity of leisure externality is large enough. The existence of indeterminacy is crucially depends on the degree of leisure externality.