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Monetary Policy, Overlapping Generations, and Patterns of Growth

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  • Mino, Kazuo
  • Shibata, Akihisa

Abstract

This paper investigates the role of monetary policy in economic growth. Using an infinitely lived overlapping-generations model with a simple convex technology that can yield endogenous growth, the authors show that money supply behavior of the government may have significant effects on the long-run economic growth. In addition to the effect on the long-term growth rate of the economy, the policy may determine whether the economy stays in the exogenous growth process restricted by the growth rate of labor supply or realizes the endogenous growth that sustains continuous growth of per capita income and consumption. Copyright 1995 by The London School of Economics and Political Science.

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  • Mino, Kazuo & Shibata, Akihisa, 1995. "Monetary Policy, Overlapping Generations, and Patterns of Growth," Economica, London School of Economics and Political Science, vol. 62(246), pages 179-194, May.
  • Handle: RePEc:bla:econom:v:62:y:1995:i:246:p:179-94
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    Cited by:

    1. Lu, Chia-Hui & Chen, Been-Lon & Hsu, Mei, 2011. "The dynamic welfare cost of seignorage tax and consumption tax in a neoclassical growth model with a cash-in-advance constraint," Journal of Macroeconomics, Elsevier, vol. 33(2), pages 247-258, June.
    2. Akira Yakita, 2006. "Life expectancy, money, and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(3), pages 579-592, July.
    3. Momota, Akira & Futagami, Koichi, 2005. "Demographic structure, international lending and borrowing in growing interdependent economies," Journal of the Japanese and International Economies, Elsevier, vol. 19(1), pages 135-162, March.
    4. Luciano Fanti, 2012. "Fertility and money in an OLG model," Discussion Papers 2012/145, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Chang, Wen-ya & Hsieh, Yi-ni & Lai, Ching-chong, 2000. "Social status, inflation, and endogenous growth in a cash-in-advance economy," European Journal of Political Economy, Elsevier, vol. 16(3), pages 535-545, September.
    6. Kazuo Mino, 2017. "Sunspot-Driven Business Cycles: An Overview," KIER Working Papers 973, Kyoto University, Institute of Economic Research.
    7. Robert Amano & Tom Carter & Kevin Moran, 2012. "Inflation and Growth: A New Keynesian Perspective," CIRANO Working Papers 2012s-20, CIRANO.
    8. Shaw, Ming-Fu & Lai, Ching-Chong & Chang, Wen-Ya, 2005. "Anticipated policy and endogenous growth in a small open monetary economy," Journal of International Money and Finance, Elsevier, vol. 24(5), pages 719-743, September.
    9. Shu-Hua Chen, 2015. "Fiscal and Monetary Policies in a Transactions-Based Endogenous Growth Model with Imperfect Competition," The Japanese Economic Review, Japanese Economic Association, vol. 66(1), pages 89-111, March.
    10. Chang, Wen-ya & Chen, Ying-an & Chang, Juin-jen, 2013. "Growth and welfare effects of monetary policy with endogenous fertility," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 117-130.
    11. Luigi Bonatti, 2003. "'Soft' growth and the role of monetary policy in selecting the long-run equilibrium path," Working Papers (-2012) 0306, University of Bergamo, Department of Economics.
    12. Wei-Bin Zhang, 2014. "National and International Inequalities in Income and Wealth in a Global Growth with Free Trade and National Inflation Policies," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 22-40, May.
    13. Lu Chia-Hui & Chen Been-Lon & Hsu Mei, 2011. "The Dynamic Relationship between Inflation and Output Growth in a Cash-Constrained Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-29, May.
    14. Ehrhart, Hélène & Minea, Alexandru & Villieu, Patrick, 2014. "Debt, seigniorage, and the Growth Laffer Curve in developing countries," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 199-210.
    15. 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.
    16. Ryo Arawatari & Takeo Hori & Kazuo Mino, 2016. "On the Nonlinear Relationship between Inflation and Growth: A Theoretical Exposition," KIER Working Papers 950, Kyoto University, Institute of Economic Research.
    17. Ramser, Hans Jürgen, 2000. "Geld und Wirtschaftswachstum," Discussion Papers, Series I 301, University of Konstanz, Department of Economics.
    18. Rabnawaz, Ambar & Jafar, Rana Muhammad Sohail, 2015. "Impact of Public Investment on Economic Growth," MPRA Paper 70377, University Library of Munich, Germany.
    19. Yasuoka, Masaya, 2016. "Money and Pay-As-you-Go Pension," MPRA Paper 75578, University Library of Munich, Germany.
    20. Lai, Ching-Chong & Chin, Chi-Ting, 2013. "Monetary Rules And Endogenous Growth In An Open Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 17(02), pages 431-463, March.
    21. Jhy-Yuan Shieh & Wen-Ya Chang & Ching-Chong Lai, 2007. "An Endogenous Growth Model Of Capital And Arms Accumulation," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 557-575.

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