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Inflation, variability, and the evolution of human capital in a model with transactions costs

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  • Varvarigos, Dimitrios
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    Abstract

    In a monetary growth model, I show that average inflation inhibits growth while inflation volatility enhances it. The effect of nominal volatility on human capital accumulation depends on the response of money demand and the corresponding extent of transactions costs rather than from a direct, precautionary motive.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-4NR1878-3/1/62a212e2cafd5fa9c3f1136fb91afe0d
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 98 (2008)
    Issue (Month): 3 (March)
    Pages: 320-326

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    Handle: RePEc:eee:ecolet:v:98:y:2008:i:3:p:320-326

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    Web page: http://www.elsevier.com/locate/ecolet

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    1. Ho, Wai-Ming, 1996. "Imperfect Information, Money, and Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 578-603, November.
    2. Hercowitz, Zvi & Sampson, Michael, 1991. "Output Growth, the Real Wage, and Employment Fluctuations," American Economic Review, American Economic Association, vol. 81(5), pages 1215-37, December.
    3. Blackburn, Keith & Pelloni, Alessandra, 2004. "On the relationship between growth and volatility," Economics Letters, Elsevier, vol. 83(1), pages 123-127, April.
    4. Sailesh K. Jha & Ping Wang & Chong K.Yip, 2000. "Dynamics in a Transactions-Based Monetary Growth Model," Vanderbilt University Department of Economics Working Papers 0005, Vanderbilt University Department of Economics.
    5. Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
    6. van der Ploeg, Frederick & Alogoskoufis, George S, 1994. "Money and Endogenous Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 771-91, November.
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    Cited by:
    1. Annicchiarico, B. & Corrado, L. & Pelloni, A., 2008. "Long-Term Growth and Short-Term Volatility: The Labour Market Nexus," Cambridge Working Papers in Economics 0823, Faculty of Economics, University of Cambridge.
    2. Elena Andreou & Alessandra Pelloni & Marianne Sensier, 2013. "Is Volatility Good for Growth? Evidence from the G7," CEIS Research Paper 258, Tor Vergata University, CEIS, revised 08 Jan 2013.
    3. Annicchiarico, Barbara & Rossi, Lorenza, 2013. "Optimal monetary policy in a New Keynesian model with endogenous growth," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 274-285.
    4. Abbi M Kedir & Nor Yasmin Mhd Bani, 2012. "Panel Data Evidence on the Role of Education in the Growth-Volatility Relationship," Discussion Papers in Economics 12/04, Department of Economics, University of Leicester.

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