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Social status, human capital formation and super-neutrality in a two-sector monetary economy

  • Chen, Hung- Ju

In this paper, we study how social status affects the impact of monetary policy on the long-run growth rate in a two-sector monetary economy with human capital accumulation, and find that the super-neutrality of money, with regard to the growth rate of the economy depends on the formation of human capital. In an economy with Lucas-type human capital formation, money is super-neutral; however, for an economy in which both physical and human capital are used as inputs for human capital accumulation, the money growth rate will have a positive effect on the long-run economic growth rate. The existence, uniqueness and saddle-path stability of balanced-growth equilibrium are also examined.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 3 (May)
Pages: 785-794

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:785-794
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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