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Long-Run Impacts of Inflation Tax in the Presence of Multiple Capital Goods

  • Seiya Fujisaki

    ()

    (Graduate School of Economics, Osaka University)

  • Kazuo Mino

    ()

    (Insititute of Economic Research, Kyoto University)

This paper examines the long-run impact of inflation tax in the context of a generalized Ak growth model in which the production technology uses two types of capital stocks under a constant-returns-to-scale technology. We find that unless investment expenditure for each type of capital is subject to the same degree of cash-in-advance constraint, a change in the money growth rate affects the steady-state level of factor intensity. It is shown that if the balanced-growth path is uniquely given, we still have a negative longrun relationship between money growth and the growth rate of real income. However, due to the endogenous determination of the factor intensity, the negative relation between the velocity of money and the rate of inflation may not be established.

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File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P12.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 29 (2009)
Issue (Month): 3 ()
Pages: 1644-1652

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Handle: RePEc:ebl:ecbull:eb-09-00359
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  1. repec:ebl:ecbull:v:5:y:2004:i:2:p:1-7 is not listed on IDEAS
  2. Ming Hon Suen & Chong K. Yip, 2001. "Superneutrality, Indeterminacy, and Endogenous Growth," Departmental Working Papers _136, Chinese University of Hong Kong, Department of Economics.
  3. repec:ebl:ecbull:v:5:y:2008:i:13:p:1-7 is not listed on IDEAS
  4. Jha, Sailesh K. & Wang, Ping & Yip, Chong K., 2002. "Dynamics in a transactions-based monetary growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 611-635, April.
  5. Jun-ichi Itaya & Kazuo Mino, 2005. "Technology, Preference Structure, and the Growth Effect of Money Supply," Discussion Papers in Economics and Business 05-35, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  6. repec:ebl:ecbull:v:5:y:2007:i:11:p:1-7 is not listed on IDEAS
  7. Chen, Shu-Hua & Guo, Jang-Ting, 2008. "Velocity of money, equilibrium (in)determinacy and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1085-1096, September.
  8. Jang-Ting Guo & Shu-Hua Chen, 2008. "On the growth and velocity effects of money," Economics Bulletin, AccessEcon, vol. 5(13), pages 1-7.
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