Growth-Effects of Inflation Targeting: The Role of Financial Sector Development
The paper develops a dynamic general equilibrium monetary endogenous growth model. The closed economy model is inhabited by consumers, firms, a Cournotian monopolistically competitive banking system, besides, an inflationtargeting monetary authority, and, in turn, analyzes the effect of a tight monetary (disinflationary) policy on growth. We show that the effect of a lower inflation target on growth is ambiguous, with the ultimate effect depending on the initial levels of growth and the individual bank size, besides, a whole host of structural parameters defining the preferences and the production structure of the economy.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicholas Apergis & Stephen M. Miller & Alexandros Panethimitakis & Athanassios Vamvakidis, 2005. "Inflation Targeting and Output Growth: Evidence from Aggregate European Data," Working papers 2005-06, University of Connecticut, Department of Economics.
- Barro, Robert J., 1990.
"Government Spending in a Simple Model of Endogeneous Growth,"
3451296, Harvard University Department of Economics.
- Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- V. V. Chari & Larry E. Jones & Rodolfo E. Manuelli, 1995. "The growth effects of monetary policy," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 18-32.
- Rangan Gupta & Josine Uwilingiye, 2010. "Evaluating the Welfare Cost of Inflation in a Monetary Endogenous Growth General Equilibrium Model: The Case of South Africa," Working Papers 201002, University of Pretoria, Department of Economics.
- Valerie R. Bencivenga & Bruce D. Smith, 1991.
"Financial Intermediation and Endogenous Growth,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 195-209.
- Arminio Fraga & Ilan Goldfajn & André Minella, 2004.
"Inflation Targeting in Emerging Market Economies,"
in: NBER Macroeconomics Annual 2003, Volume 18, pages 365-416
National Bureau of Economic Research, Inc.
- Arminio Fraga & Ilan Goldfajn & Andre Minella, 2003. "Inflation Targeting in Emerging Market Economies," NBER Working Papers 10019, National Bureau of Economic Research, Inc.
- Arminio Fraga & Ilan Goldfajn & André Minella, 2003. "Inflation Targeting in Emerging Market Economies," Working Papers Series 76, Central Bank of Brazil, Research Department.
- Espinosa-Vega, Marco A & Yip, Chong K, 1999.
"Fiscal and Monetary Policy Interactions in an Endogenous Growth Model with Financial Intermediaries,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 595-615, August.
- Marco Espinosa & Chong K. Yip, 1998. "Fiscal and Monetary Policy Interactions in an Endogenous Growth Model with Financial Intermediaries," Departmental Working Papers _094, Chinese University of Hong Kong, Department of Economics.
- Marco A. Espinosa-Vega & Chong K. Yip, 1995. "Fiscal and monetary policy interactions in an endogenous growth model with financial intermediaries," FRB Atlanta Working Paper 95-10, Federal Reserve Bank of Atlanta.
- Gilberto Libanio, 2005. ""Good governance" in monetary policy and the negative real effects of inflation targeting in developing economies," Textos para Discussão Cedeplar-UFMG td277, Cedeplar, Universidade Federal de Minas Gerais.
- Miguel A. León-Ledesma & A. P. Thirlwall, 1998.
"The Endogeneity of the Natural Rate of Growth,"
Studies in Economics
9821, School of Economics, University of Kent.
- WenShwo Fang & Stephen M. Miller & ChunShen Lee, 2009. "Inflation Targeting Evaluation: Short-run Costs and Long-run Irrelevance," Working Papers 0920, University of Nevada, Las Vegas , Department of Economics.
- WenShwo Fang & Stephen Miller, 2011.
"The lag in effect of inflation targeting and policy evaluation,"
Applied Economics Letters,
Taylor & Francis Journals, vol. 18(14), pages 1371-1375.
- WenShwo Fang & Stephen M. Miller, 2010. "The Lag in Effect of Inflation Targeting and Policy Evaluation," Working papers 2010-01, University of Connecticut, Department of Economics.
- Marco Vega & Diego Winkelried, 2005.
"Inflation Targeting and Inflation Behavior: A Successful Story?,"
International Journal of Central Banking,
International Journal of Central Banking, vol. 1(3), December.
- Marco Vega & Diego Winkelried, 2005. "Inflation Targeting and Inflation Behavior: A Successful Story?," Macroeconomics 0502026, EconWPA.
- Vega, Marco & Winkelried, Diego, 2004. "Inflation Targeting and Inflation Behavior: A Successful Story?," MPRA Paper 838, University Library of Munich, Germany.
- Marc Lavoie, 2006. "A Post-Keynesian Amendment To The New Consensus On Monetary Policy," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 165-192, 05.
- Varella Mollick, Andre & Torres, Rene Cabral & Carneiro, Francisco G., 2008.
"Does Inflation Targeting Matter for Output Growth? Evidence from Industrial and Emerging Economies,"
Policy Research Working Paper Series
4791, The World Bank.
- Mollick, André Varella & Cabral, René & Carneiro, Francisco G., 2011. "Does inflation targeting matter for output growth? Evidence from industrial and emerging economies," Journal of Policy Modeling, Elsevier, vol. 33(4), pages 537-551, July.
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
When requesting a correction, please mention this item's handle: RePEc:cuf:journl:y:2011:v:12:i:1:p:65-87. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.