Contrasting Models of the Effect of Inflation on Growth

.  The paper formulates a nesting model for studying the theoretical literature on inflation and endogenous growth. It analyses different classes of endogenous growth models, with different usage of physical and human capital, with different exchange technologies. First, the paper shows that a broad...

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Bibliographic Details
Published in:Journal of economic surveys 2005-02, Vol.19 (1), p.113-136
Main Authors: Gillman, Max, Kejak, Michal
Format: Article
Language:English
Subjects:
Balanced-growth-path
Business cycles
Calibration
Cash-in-advance
Comparative studies
Correlation analysis
Economic growth
Economic models
Economic theory
Endogenous growth
Growth models
Human capital
Inflation
Mathematical models
Monetary economics
Monetary policy
Output rate
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Summary:.  The paper formulates a nesting model for studying the theoretical literature on inflation and endogenous growth. It analyses different classes of endogenous growth models, with different usage of physical and human capital, with different exchange technologies. First, the paper shows that a broad array of models can all generate significant negative effects of inflation on growth. Second, it shows that these models can be differentiated primarily by the fact whether there is a Tobin‐type effect of inflation and also whether the inflation–growth effect becomes weaker as the inflation rate rises, a non‐linearity, or stays essentially constant over the range of inflation rates. The paper compares these features of the models to empirical evidence as a way to summarize the efficacy of the models.
ISSN:0950-0804
1467-6419
DOI:10.1111/j.0950-0804.2005.00241.x