This paper contributes to the existing literature in the cash-in-advance asset-pricing general equilibrium model for open economies by showing that if one allows for a variable velocity of circulation in the domestic and/or foreign economy, the respon...
This paper contributes to the existing literature in the cash-in-advance asset-pricing general equilibrium model for open economies by showing that if one allows for a variable velocity of circulation in the domestic and/or foreign economy, the responses of assets, currencies, and relative prices to changes in the conditional variance of the domestic and/or foreign monetary growth process are critically different from the case where the velocities of circulation are constant.