On Skill Heterogeneity, Human Capital, and Inflation
AbstractThis paper examines the welfare costs of inflation within a monetary dynamic general equilibrium framework with human capital that incorporates endogenous, ex ante skill heterogeneity among workers. Numerical experiments indicate that, overall, welfare costs are more likely to decrease with increases in skill heterogeneity. An implication of this feature is that a greater degree of skill heterogeneity may be associated with a higher tolerance for inflation, consequently implying a positive correlation between agent heterogeneity and inflation. Using a panel of several countries we empirically test this proposition. Our evidence lends some support to this hypothesis.
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Bibliographic InfoArticle provided by Springer in its journal International Advances in Economic Research.
Volume (Year): 13 (2007)
Issue (Month): 3 (August)
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Web page: http://www.springerlink.com/link.asp?id=112112
Other versions of this item:
- Radhika Lahiri & Elisabetta Magnani, 2005. "On Skill Heterogeneity, Human Capital, and Inflation," School of Economics and Finance Discussion Papers and Working Papers Series 205, School of Economics and Finance, Queensland University of Technology.
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
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