Inflation, Investment and Growth: a Money and Banking Approach

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Output growth, investment and the real interest rate in long run evidence tend to be negatively a¤ected by in ‡ation. Theoretically, in ‡ation acts as a human capital tax that decreases output growth and the real interest rate, but increases the investment rate, opposite of evidence. The paper resolves this puzzle by requiring exchange for investment as well as consumption. In ‡ation then decreases the investment rate, and still decreases both output growth and real interest up to some moderately high rate of in ‡ation, above which increasingly low investment …nally causes capital to fall relative to labor, and the real interest rate to rise. JEL: C23, E44, O16, O42 Terms of use: Documents in

Liquidity, innovation and growth

“…For each robustness check we recalibrate the model and perform the same counterfactual experiments as in the text. 23 …”

“…However, the the effects are only slightly larger than the one discussed in Table 6 where we only change the inflation rate since the growth and welfare implication are mainly driven by the higher inflation. 23 The parameter values resulting from the recalibration are available by request. 24 Instead of using this shortcut to model the role of money in the final goods market, we have also introduced matching frictions and decentralized trades to generate a demand for money.…”

Pledgability and Liquidity: A New Monetarist Model of Financial and Macroeconomic Activity

“…1 Other papers focus more on growth rates, not levels Gillman and Kejak (2011). …nd growth, investment and real interest rates tend to be negatively a¤ected by in ‡ation Gillman and Nakov (2003).…”

A Machine Learning Approach to Forecast Economic Recessions—An Italian Case Study

“…Inflation also affects the accumulation of other determinants of growth such as human capital or investment in R&D: this channel of influence constitutes what is known as the accumulation or investment effect of inflation on growth [23]. Furthermore, other studies conducted by the authors of Reference [24] have shown that high inflation is caused by increased public spending and is the same that prevents investment and reduces productivity also in the future [25,26]. Other studies [27] have shown that inappropriate and exaggerated government spending can lead to increased consumer demand and halt production investment.…”