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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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    9. Stephanie Kremer & Alexander Bick & Dieter Nautz, 2009. "Inflation and Growth: New Evidence From a Dynamic Panel Threshold Analysis," SFB 649 Discussion Papers SFB649DP2009-036, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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    13. By Mohsin S. Khan & Abdelhak S. Senhadji, 2001. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1.
    14. 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.
    15. 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.
    16. 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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    18. Paul Gomme, 1991. "Money and growth revisited," Discussion Paper / Institute for Empirical Macroeconomics 55, Federal Reserve Bank of Minneapolis.
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