On Skill Heterogeneity, Human Capital, and Inflation
AbstractThis paper examines the welfare costs of inflation within a monetary dynamic general equilibrium framework with human capital that incorporates endogenous, ex ante skill heterogeneity among workers. Numerical experiments indicate that, overall, welfare costs are more likely to decrease with increases in skill heterogeneity. An implication of this feature is that a greater degree of skill heterogeneity may be associated with a higher tolerance for inflation, consequently implying a positive correlation between agent heterogeneity and inflation. Using a panel of several countries we empirically test this proposition. Our evidence lends some support to this hypothesis.
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Bibliographic InfoPaper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 205.
Date of creation: 15 Jun 2005
Date of revision:
Other versions of this item:
- Radhika Lahiri & Elisabetta Magnani, 2007. "On Skill Heterogeneity, Human Capital, and Inflation," International Advances in Economic Research, Springer, vol. 13(3), pages 393-394, August.
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-CBA-2007-02-17 (Central Banking)
- NEP-HRM-2007-02-17 (Human Capital & Human Resource Management)
- NEP-MAC-2007-02-17 (Macroeconomics)
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