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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/52477
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| Title: | | The cash-in-advance constraint in monetary growth models  |
| Authors: | | Heer, Burkhard Maussner, Alfred |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3647 |
| Abstract: | | In most monetary models of economic growth, higher long-run inflation is associated with a decline in the growth rate and employment. We show that this result is sensitive with respect to the specification of the cash-in-advance constraint. We consider three types of endogenous growth models: 1) the AK-model, 2) the Lucas (1990) supply-side model, and 3) the two-sector model of Jones and Manuelli (1995). With the standard cash-in-advance constraint on consumption, higher inflation results in lower growth and employment in all three models, while, in the cash-credit good economy of Dotsey and Ireland (1996), the effect is the exact opposite. |
| Subjects: | | inflation growth costly credit search unemployment |
| JEL: | | O42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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