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Money and Long-run Growth

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  • Zhou, Ge
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    Abstract

    This paper revisits the relationship between money and long-run growth when liquidity demand at the �rm level is explicitly modelled. Through a set of sensitivity analyses, I �nd that this relationship could be positive, negative, or display a hump shape depending on the size of average liquidity demand and the level of �nancial development. These results explain why existing empirical studies report mixed �ndings on the relationship.

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    File URL: http://mpra.ub.uni-muenchen.de/33765/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33765.

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    Date of creation: Jun 2011
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    Handle: RePEc:pra:mprapa:33765

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    Keywords: Liquidity Demand; Endogenous Growth; Monetary Supply;

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    1. Alan C. Stockman, 1996. "Inflation, growth, and financial intermediation - commentary," Proceedings, Federal Reserve Bank of St. Louis, issue May, pages 62-64.
    2. Yip, C.K. & Wang, P., 1989. "Alternative Approaches To Money And Growth," Papers 8-89-4, Pennsylvania State - Department of Economics.
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    9. Paul Gomme, 1991. "Money and growth revisited," Discussion Paper / Institute for Empirical Macroeconomics 55, Federal Reserve Bank of Minneapolis.
    10. van der Ploeg, Frederick & Alogoskoufis, George S, 1994. "Money and Endogenous Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 771-91, November.
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    12. Chang, Wen-ya & Lai, Ching-chong, 2000. "Anticipated Inflation in a Monetary Economy with Endogenous Growth," Economica, London School of Economics and Political Science, vol. 67(267), pages 399-417, August.
    13. Bullard, James & Keating, John W., 1995. "The long-run relationship between inflation and output in postwar economies," Journal of Monetary Economics, Elsevier, vol. 36(3), pages 477-496, December.
    14. Brock, William A, 1974. "Money and Growth: The Case of Long Run Perfect Foresight," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(3), pages 750-77, October.
    15. Atish R. Ghosh & Steven Phillips, 1998. "Inflation, Disinflation, and Growth," IMF Working Papers 98/68, International Monetary Fund.
    16. Joseph H. Haslag, 1997. "Output, growth, welfare, and inflation: a survey," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 11-21.
    17. Orphanides, Athanasios & Solow, Robert M., 1990. "Money, inflation and growth," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 6, pages 223-261 Elsevier.
    18. Chang, Wen-ya, 2002. "Examining the long-run effect of money on economic growth: an alternative view," Journal of Macroeconomics, Elsevier, vol. 24(1), pages 81-102, March.
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