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Inflation gifts and endogenous growth through learning-by-doing

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  • Andrea Vaona

    ()
    (Department of Economics (University of Verona))

Abstract

We investigate the link between inflation, growth and unemployment nesting a model of fair wages into one of endogenous growth of learning by doing and assuming that firms protect wages' purchasing power against inflation in exchange of worker's effort. Unemployment decreases with higher inflation and real growth rates. These effects tends to vanish as inflation and growth increase. Depending on the assumptions on learning-by-doing mechanisms, the effect of inflation on growth can be either nil or positive, but tiny. The Appendix shows that the short run effects of a monetary shocks mirror the long-run effects of inflation.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 09/2013.

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Date of creation: May 2013
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Handle: RePEc:ver:wpaper:09/2013

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Keywords: efficiency wages; money growth; long-run Phillips curve; trend inflation;

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