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Inflation and human capital formation : theory and panel data evidence

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  • F. HEYLEN

    ()

  • A. SCHOLLAERT

    ()

  • G. EVERAERT

    ()

  • L. POZZI

    ()

Abstract

Existing monetary growth theories predict either negative or neutral effects from inflation on human capital. In this paper we develop a simple alternative model, which can generate positive effects. Our empirical analysis for 93 countries in 1975-1995 tends to confirm these positive effects. Using recent GMM panel data procedures, we find that rising inflation basically stimulates human capital. A robust negative effect can be observed only at extremely high inflation rates. A representative threshold may be 100%. For inflation rates below 15%, the effect of rising inflation seems insignificant. The latter result can also be rationalized from our model.

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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 03/174.

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Length: 32 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:rug:rugwps:03/174

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Keywords: Human capital; education; inflation; monetary growth models; panel data;

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Cited by:
  1. D. Van Den Poel, 2003. "Predicting Mail-Order Repeat Buying: Which Variables Matter?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/191, Ghent University, Faculty of Economics and Business Administration.

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