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Endogenous Growth, Monetary Shocks and Nominal Rigidities

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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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 187.

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Length: 13 pages
Date of creation: 08 Mar 2011
Date of revision: 08 Mar 2011
Handle: RePEc:rtv:ceisrp:187
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