Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation
AbstractThis paper examines the long-run impact of inflation tax in the context of a generalized Ak growth model in which the rate of capital depreciation is endogenously determined. It is assumed that the rate of capital depreciation positively depends on capital utilization rate and negatively depends on maintenance spending. Money is introduced via a cash in advance constraint that may apply to the maintenance expenditure as well as to consumption and investment spending. We find that the long-run effects of inflation tax are more complex than those obtained in the monetary Ak growth model with a fixed capital depreciation rate. In particular, the relation between inflation and growth is highly sensitive to the specifications of the capital depreciation technology as well as to the forms of cash-in-advance constraint.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16657.
Date of creation: 13 Jul 2009
Date of revision:
cash-in-advance constraint; AK growth model; endogenous capital depreciation; maintenance expenditures;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-08-16 (Accounting & Auditing)
- NEP-ALL-2009-08-16 (All new papers)
- NEP-DGE-2009-08-16 (Dynamic General Equilibrium)
- NEP-MAC-2009-08-16 (Macroeconomics)
- NEP-MON-2009-08-16 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jun-ichi Itaya & Kazuo Mino, 2005.
"Technology, Preference Structure, and the Growth Effect of Money Supply,"
Discussion Papers in Economics and Business
05-35, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- Itaya, Jun-Ichi & Mino, Kazuo, 2007. "Technology, Preference Structure, And The Growth Effect Of Money Supply," Macroeconomic Dynamics, Cambridge University Press, vol. 11(05), pages 589-612, November.
- Ellen R. McGrattan & James A. Schmitz, Jr., 1999. "Maintenance and repair: too big to ignore," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 2-13.
- Chen, Shu-Hua & Guo, Jang-Ting, 2008. "Velocity of money, equilibrium (in)determinacy and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1085-1096, September.
- Licandro, Omar & Puch, Luis A., .
"Capital utilization: maintenance costs and the business cycle,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/3917, Universidad Carlos III de Madrid.
- Omar LICANDRO & Luis A. PUCH, 2000. "Capital Utilization, Maintenance Costs and the Business Cycle," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 143-164.
- 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.
- Jha, Sailesh K. & Wang, Ping & Yip, Chong K., 2002. "Dynamics in a transactions-based monetary growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 611-635, April.
- J. Aznar-Marquez & J.R. Ruiz-Tamarit, 2001.
"Endogenous Growth, Capital Utilization and Depreciation,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
2001037, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- J. Aznar-Márquez & J. R. Ruiz-Tamarit, . "Endogenous Growth, Capital Utilization and Depreciation," Working Papers 2004-21, FEDEA.
- repec:ebl:ecbull:v:5:y:2004:i:2:p:1-7 is not listed on IDEAS
- Omar Licandro & Luis A. Puch & J. Ramón Ruiz-Tamarit, .
"Optimal Growth under Endogenous Depreciation, Capital Utilization and Maintenance Costs,"
- Omar Licandro & Luis A. Puch & J. Ramón Ruiz-Tamarit, 2001. "Optimal growth under endogenous depreciation, capital utilization and maintenance costs," Investigaciones Economicas, Fundación SEPI, vol. 25(3), pages 543-559, September.
- Omar Licandro & Luis A. Puch & J. Ramón Ruiz Tamaritz, 2001. "Optimal Growth under Endogeneous Depreciation, Capital Utilization and Maintenance Costs," Documentos del Instituto Complutense de AnÃ¡lisis EconÃ³mico 0101, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
- Jang-Ting Guo & Kevin J. Lansing, 2005.
"Maintenance expenditures and indeterminacy under increasing returns to scale,"
Working Paper Series
2005-10, Federal Reserve Bank of San Francisco.
- Jang-Ting Guo & Kevin J. Lansing, 2007. "Maintenance expenditures and indeterminacy under increasing returns to scale," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(2), pages 147-158.
- Seiya Fujisaki & Kazuo Mino, 2009.
"Long-Run Impacts of Inflation Tax in the Presence of Multiple Capital Goods,"
AccessEcon, vol. 29(3), pages 1644-1652.
- Fujisaki, Seiya & Mino, Kazuo, 2009. "Long-Run Impacts of Inflation Tax in the Presence of Multiple Capital Goods," MPRA Paper 16964, University Library of Munich, Germany.
- repec:ebl:ecbull:v:5:y:2008:i:13:p:1-7 is not listed on IDEAS
- Jang-Ting Guo & Shu-Hua Chen, 2008. "On the growth and velocity effects of money," Economics Bulletin, AccessEcon, vol. 5(13), pages 1-7.
- repec:ebl:ecbull:v:5:y:2007:i:11:p:1-7 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.