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Money, Endogenous Fertility and Economic Growth

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  • Petrucci, Alberto

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Abstract

This paper analyzes the issue of money superneutrality through an intertemporal optimizing model of capital accumulation with endogenous fertility, i.e. endogenous population growth. Two elements of this setup invalidate money superneutrality: i) a demand for fertility that depends on real money balances, and ii) an inverse relation between capital-labor ratio and population growth. Higher monetary growth increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, and per capita output. This reverse Tobin effect is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule is a "distorted Friedman rule".

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File URL: http://web.unimol.it/progetti/repec/mol/ecsdps/ESDP03003.pdf
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Bibliographic Info

Paper provided by University of Molise, Dept. EGSeI in its series Economics & Statistics Discussion Papers with number esdp03003.

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Length: 28 pages
Date of creation: 14 Apr 2003
Date of revision:
Handle: RePEc:mol:ecsdps:esdp03003

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Keywords: Money superneutrality; Inflation; Fertility; Capital accumulation;

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Cited by:
  1. Ken-ichi Hashimoto & Yoshiyasu Ono, 2007. "Does Pro-population Policy Raise Per Capita Consumption?," ISER Discussion Paper 0697, Institute of Social and Economic Research, Osaka University.
  2. Marco Guerrazzi, 2010. "Nominal Wage Indexation, Quasi-Equilibria And Real Wage Dynamics," Bulletin of Economic Research, Wiley Blackwell, vol. 62(3), pages 279-294, 07.

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