Volatile public spending in a model of money and sustainable growth
In a model where seignorage provides the financing instrument for the government’s budget, public spending volatility has an adverse effect on long-run growth. This negative relationship arises because the incidence of volatility in this type of public policy is responsible for higher average money growth, thus induces individuals to devote less time/effort towards capital accumulation. Another implication of the model is that policy variability provides a possible argument behind the positive correlation between inflation and inflation variability.
|Date of creation:||Jul 2007|
|Date of revision:||Jul 2007|
|Contact details of provider:|| Postal: Loughborough, Leicestershire, LE11 3TU|
Phone: +44 (0) 1509 222701
Fax: +44 (0) 1509 223910
Web page: http://www.lboro.ac.uk/departments/sbe/research/economics/index.html
More information through EDIRC
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.:
- Stanley Fischer & Ratna Sahay & Carlos A. VÃ©gh Gramont, 2002.
"Modern Hyper- and High Inflations,"
IMF Working Papers
02/197, International Monetary Fund.
- Joshua Aizenman & Nancy Marion, 1991.
"Policy Uncertainty, Persistence and Growth,"
NBER Working Papers
3848, National Bureau of Economic Research, Inc.
- Robert J. Barro, 2013.
"Inflation and Economic Growth,"
Annals of Economics and Finance,
Society for AEF, vol. 14(1), pages 121-144, May.
- Hugo A. Hopenhayn & Maria E. Muniagurría, 1993.
"Policy variability and economic growth,"
Economics Working Papers
30, Department of Economics and Business, Universitat Pompeu Fabra.
- Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-72, June.
- Poterba, James M & Rotemberg, Julio J, 1990.
"Inflation and Taxation with Optimizing Governments,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 22(1), pages 1-18, February.
- James M. Poterba & Julio J. Rotemberg, 1988. "Inflation And Taxation With Optimizing Governments," NBER Working Papers 2567, National Bureau of Economic Research, Inc.
- Poterba, J.M. & Rotemberg, J.J., 1989. "Inflation And Taxation With Optimizing Governments," Working papers 521, Massachusetts Institute of Technology (MIT), Department of Economics.
- Devereux, Michael, 1989. "A Positive Theory of Inflation and Inflation Variance," Economic Inquiry, Western Economic Association International, vol. 27(1), pages 105-16, January.
- Fountas, Stilianos & Karanasos, Menelaos, 2007.
"Inflation, output growth, and nominal and real uncertainty: Empirical evidence for the G7,"
Journal of International Money and Finance,
Elsevier, vol. 26(2), pages 229-250, March.
- Stilianos Fountas & Menelaos Karanasos, 2002. "Inflation, Output Growth, and Nominal and Real Uncertainty: Empirical Evidence for the G7," Working Papers 0064, National University of Ireland Galway, Department of Economics, revised 2002.
- Judson, Ruth & Orphanides, Athanasios, 1999.
"Inflation, Volatility and Growth,"
Wiley Blackwell, vol. 2(1), pages 117-38, April.
- Thornton, John, 2008. "Inflation and inflation uncertainty in Argentina, 1810-2005," Economics Letters, Elsevier, vol. 98(3), pages 247-252, March.
- Hugo A. Hopenhayn & María E. Muniagurria, 1996. "Policy Variability and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 63(4), pages 611-625.
- Davide Furceri, 2007. "Is Government Expenditure Volatility Harmful for Growth? A Cross-Country Analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 28(1), pages 103-120, 03.
- Dimitrios Varvarigos, 2007. "Policy Variability, Productive Spending and Growth," Economica, London School of Economics and Political Science, vol. 74(294), pages 299-313, 05.
- Logue, Dennis E & Willett, Thomas D, 1976. "A Note on the Relation between the Rate and Variability of Inflation," Economica, London School of Economics and Political Science, vol. 43(17), pages 151-58, May.
- Wilson, Bradley Kemp, 2006. "The links between inflation, inflation uncertainty and output growth: New time series evidence from Japan," Journal of Macroeconomics, Elsevier, vol. 28(3), pages 609-620, September.
- Brunetti, Aymo, 1998. "Policy volatility and economic growth: A comparative, empirical analysis," European Journal of Political Economy, Elsevier, vol. 14(1), pages 35-52, February.
- Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
- Kevin B. Grier & Mark J. Perry, 2000. "The effects of real and nominal uncertainty on inflation and output growth: some garch-m evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 45-58.
When requesting a correction, please mention this item's handle: RePEc:lbo:lbowps:2007_18. 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: (Huw Edwards)
If references are entirely missing, you can add them using this form.