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Volatile public spending in a model of money and sustainable growth Author info | Abstract | Publisher info | Download info | Related research | Statistics Dimitrios Varvarigos () (Dept of Economics, Loughborough University )
In a model where seignorage provides the financing instrument for the government’s budget, public spending volatility has an adverse effect on long-run growth. This negative relationship arises because the incidence of volatility in this type of public policy is responsible for higher average money growth, thus induces individuals to devote less time/effort towards capital accumulation. Another implication of the model is that policy variability provides a possible argument behind the positive correlation between inflation and inflation variability.
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Paper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number
2007_18.
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Date of creation: Jul 2007Date of revision:
Jul 2007Handle: RePEc:lbo:lbowps:2007_18Contact details of provider: Postal: Loughborough, Leicestershire, LE11 3TU Phone: +44 (0) 1509 222701 Fax: +44 (0) 1509 223910 Web page: http://www.lboro.ac.uk/departments/ec/Research.htm More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Dr. Claudio Piga).
Keywords: Growth ; Inflation ; Seignorage ; Volatility ; Find related papers by JEL classification: E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
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