Inflation, Financial Development and Endogenous Growth
AbstractThe paper extends the literature on financial development, inflation, and growth by using the idea that both the rates of return on physical and human capital affect growth. This leads to the introduction of the investment rate into the model, as a proxy for the return to physical capital, along with the inflation rate as a variable affecting the return to human capital. As a result financial development plays a different role from the typical growth-enhancing effect found pervasively in the literature. Instead the results suggest a new hypothesis linking financial development to the nature of the effect of inflation on growth.
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Bibliographic InfoPaper provided by Monash University, Department of Econometrics and Business Statistics in its series Monash Econometrics and Business Statistics Working Papers with number 24/04.
Length: 25 pages
Date of creation: Nov 2004
Date of revision:
Contact details of provider:
Postal: PO Box 11E, Monash University, Victoria 3800, Australia
Web page: http://www.buseco.monash.edu.au/depts/ebs/
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Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-02 (All new papers)
- NEP-DEV-2004-12-02 (Development)
- NEP-MAC-2004-12-02 (Macroeconomics)
- NEP-MFD-2004-12-02 (Microfinance)
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