Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108163
Authors: 
Gillman, Max
Kejak, Michal
Year of Publication: 
2009
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2009/11
Abstract: 
Output growth, investment and the real interest rate in long run evidence tend to be negatively affected by inflation. Theoretically, inflation 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. Inflation then decreases the investment rate, and still decreases both output growth and real interest up to some moderately high rate of inflation, above which increasingly low investment finally causes capital to fall relative to labor, and the real interest rate to rise.
Subjects: 
inflation
investment
growth
Tobin
JEL: 
C23
E44
O16
O42
ISBN: 
978-963-9796-62-1
Document Type: 
Working Paper

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