Inflation and Capital Accumulation in a Two-Sector Cash-in-Advance Economy

Huo, Teh-Ming

doi:10.1016/s0164-0704(97)00006-2

Cited by 10 publications

(15 citation statements)

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“…The adoption of the Heckscher-Ohlin model allows us to broaden the discussion. Interestingly, Huo (1997) showed a nonsuperneutrality result without the inclusion of investment in the cash-in-advance constraint, which is quite different from previous findings. To retrace the interesting concern and to generalize it further, we generate a CIA constraint that contains only two consumption purchases and allow a fraction between 0 and 1 for the two goods to be purchased by cash.…”

Section: Introductioncontrasting

confidence: 99%

“…Labor and capital are assumed to be mobile across industries. The structure of production in this paper can be thought of as a generalization of Huo (1997). The economy consists of an aggregation of identical, infinitely lived representative households, each of which maximizes an intertemporal utility function that is separable in c 1 and c 2 :…”

Section: Modelmentioning

confidence: 99%

“…In the two-sector model, as Sidrauski (1970, 1971) demonstrated, permanent inflation may have a distributional effect, but their analysis is hampered by the non-optimizing nature of the model. Although Huo (1997) used an optimizing framework to illustrate the distributional effects of inflation, his model is a specific-factor model in which capital input is allocated to only one of the two sectors.…”

Section: Introductionmentioning

confidence: 99%

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Steady-State Real Effects of Inflation in a Heckscher–ohlin Cash-in-Advance Model

Chuang

2004

Macroecon. Dynam.

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This paper explores the possible real effects of inflation within a two-sector neoclassical growth model of the Heckscher–Ohlin type with a cash-in-advance constraint on the purchases of consumption goods. The main findings are that the relative prices of both factors and of both goods, which are linked via a Stolper–Samuelson relation, depend only on the rate of time preference, not on any monetary variable; that the steady-state level of total capital can be influenced by inflation if the capital intensities and the cash requirements in both sectors differ, leading to Tobin effects or reversed Tobin effects; and that higher inflation unambiguously reduces total labor supply and leads to a reversed Tobin effect in most cases if the labor/leisure choice is endogenized.

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Section: Introductioncontrasting

confidence: 99%

Section: Modelmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Steady-State Real Effects of Inflation in a Heckscher–ohlin Cash-in-Advance Model

Chuang

2004

Macroecon. Dynam.

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“…3 Economic model specification Based on discussion in Section 2, and following Huo (1997); Gylfason & Herbertsson (2001); Gillman & Kejak (2005), the following economic framework has been proposed for selected sectors.…”

Section: Gylfason and Herbertsson (2001) Develop A Theoretical Model Anmentioning

confidence: 99%

“…2 that it is still inconclusive. Considering the two-sector neoclassical growth model with different capital intensities across sectors, Huo (1997) demonstrated that the effect of inflation on economic growth depends on the capital intensity of the respective sector. It can have either a good or bad impact on economic growth.…”

Section: Introductionmentioning

confidence: 99%

Inflation‐growth nexus in developing economies: New empirical evidence from a disaggregated approach

Ayyoub

Wörz

2019

Int. J Fin Econ

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This study challenges the traditional way of examining the "inflation-output growth nexus". Research at the aggregate level yields mostly ambiguous results, we perform a dis-aggregated analysis of output growth and inflation. For each sector-industry, services and agriculture-we consider inflation and the value-added growth in a sample of 113 developing (low and middle income) economies over the period 1974-2013. Empirical investigation reveals that different sectors of the economy respond differently to various impulses of inflation. Specifically, inflation impacts the growth of industrial and services sectors negatively; whereas a growth enhancing relationship has been found for the agriculture sector. We further calculated a threshold level, for each sector, beyond which inflation is harmful to growth. These are 13.48 %, 14.48 %, 15.37 % and 40 % for aggregate GDP, industrial, services and agriculture sectors respectively. This implies that the central banks of developing economies must weigh the varying consequences of its actions on individual sectors bearing in mind each sector's share in the respective economy.

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On the real effects of inflation in open economies: theory and empirics

Mallick

Mohsin

2009

Empir Econ

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Inflation and Capital Accumulation in a Two-Sector Cash-in-Advance Economy

Cited by 10 publications

References 0 publications

Steady-State Real Effects of Inflation in a Heckscher–ohlin Cash-in-Advance Model

Steady-State Real Effects of Inflation in a Heckscher–ohlin Cash-in-Advance Model

Inflation‐growth nexus in developing economies: New empirical evidence from a disaggregated approach

On the real effects of inflation in open economies: theory and empirics

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