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Money and price dynamics under the gold standard in the neoclassical theory of growth

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  • Wei-Bin Zhang

    (Ritsumeikan Asia Pacific University)

Abstract

The purpose of this study is to determine money and price dynamics under the gold standard in the one-sector neoclassical growth model. To do this, a model is built upon a few approaches in the literature on dynamic economic theory. In particular, the production sector is based on the Solow model, the gold standard and price dynamics are founded on Barro (1979), and money demand is influenced by the traditional money-in-the-utility-function setup. The model integrates the ideas of these approaches within a compact framework. Through simulations, it is shown that the economic system is characterized by a unique unstable steady state. Also, comparative dynamic analyses regarding changes in some parameters are conducted

Suggested Citation

  • Wei-Bin Zhang, 2019. "Money and price dynamics under the gold standard in the neoclassical theory of growth," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 90, pages 45-69, Enero - J.
    • Handle: RePEc:lde:journl:y:2019:i:90:p:45-69
    DOI: 10.17533/udea.le.n90a02
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Zhang, Wei-Bin, 1993. "A woman's labor participation and economic growth : Creativity, knowledge utilization and family preference," Economics Letters, Elsevier, vol. 42(1), pages 105-110.
    3. Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
    4. Goldman, Steven M., 1972. "Hyperinflation and the rate of growth in the money supply," Journal of Economic Theory, Elsevier, vol. 5(2), pages 250-257, October.
    5. Wei-Bin Zhang, 2009. "A small open interregional monetary spatial economic growth with the MIU approach," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 56, pages 210-234, November.
    6. Wei-Bin Zhang, 2006. "Growth and Distribution," Palgrave Macmillan Books, in: Economic Growth with Income and Wealth Distribution, chapter 1, pages 1-36, Palgrave Macmillan.
    7. Chappell, David & Dowd, Kevin, 1997. "A Simple Model of the Gold Standard," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 94-105, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Wei-Bin Zhang, 2020. "Global Development, Trade, Human Capital, And Business Cycles," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 5(special), pages 9-29, June.

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    More about this item

    Keywords

    gold standard; growth model; wealth accumulation; inflation.;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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