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Endogenous Growth, Monetary Shocks and Nominal Rigidities

  • Barbara Annicchiarico

    ()

    (Department of Economics, University of Rome ‘Tor Vergata’)

  • Alessandra Pelloni

    (Department of Economics, University of Rome ‘Tor Vergata’)

  • Lorenza Rossi

    ()

    (Department of Economics and Quantitative Methods, University of Pavia)

We introduce endogenous growth in an otherwise standard NK model with staggered prices and wages. Some results follow: (i) monetary volatility negatively affects long-run growth; (ii) the relation between nominal volatility and growth depends on the persistence of the nominal shocks and on the Taylor rule considered; (iii) a Taylor rule with smoothing increases the negative effect of nominal volatility on mean growth.

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File URL: http://economia.unipv.it/docs/dipeco/quad/ps/RePEc/pav/wpaper/q120.pdf
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Paper provided by University of Pavia, Department of Economics and Quantitative Methods in its series Quaderni di Dipartimento with number 120.

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Length: 14 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:pav:wpaper:120
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  2. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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  15. Andrea Vaona, 2010. "Inflation and Growth in the Long Run: A New Keynesian Theory and Further Semiparametric Evidence," Working Papers 09/2010, University of Verona, Department of Economics.
  16. Barbara Annicchiarico & Luisa Corrado & Alessandra Pelloni, 2008. "Long-Term Growth and Short-Term Volatility: The Labour Market Nexus," CDMA Working Paper Series 200806, Centre for Dynamic Macroeconomic Analysis.
  17. Aghion, Philippe & Angeletos, George-Marios & Banerjee, Abhijit & Manova, Kalina, 2010. "Volatility and growth: Credit constraints and the composition of investment," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 246-265, April.
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