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Money, Inflation and Growth

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Authors
Blackburn, Keith; Hung, Victor T.Y.
Issue Date
1996
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 9 (No. 2 1996): 145-162
Keywords
endogenous growth model; cash-in-advance; optimum money supply rule
Abstract
Money is introduced into an endogenous growth model in which exchange requires cash-in-advance. We show that the decentralized competitive outcome is an inefficient balanced growth equilibrium in which money affects growth through two independent channels: externality in production and private transactions cost in exchange. We compute the growth (and welfare) maximizing monetary policy which trades off these two effects. We also show that, in the absence of the externality, efficiency is restorable by means of a well-known optimum money supply rule.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1080
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.09(2) (Summer 1996)
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