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Inflation and Innovation-Driven Growth

  • Funk Peter

    ()

    (University of Cologne)

  • Kromen Bettina

    ()

    (University of Cologne and European Commission)

This paper analyzes the interaction between inflation and the long-run levels of employment and output growth in a Schumpeterian growth model with quality improving innovations under nominal price rigidity. At the unique REE steady state equilibrium, both employment and growth are hump-shaped functions of money growth peaking at positive inflation rates.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 10 (2010)
Issue (Month): 1 (August)
Pages: 1-52

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Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:23
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  10. Stockman, Alan C., 1981. "Anticipated inflation and the capital stock in a cash in-advance economy," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 387-393.
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