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Money, Endogenous Fertility and Economic Growth

  • Alberto Petrucci

    (LUISS G. Carli - Department of Economics)

This paper analyzes the issue of money superneutrality through an intertemporal optimizing model of capital accumulation with endogenous fertility, i.e. endogenous population growth. Two elements of this setup invalidate money superneutrality: i) a demand for fertility that depends on real money balances, and ii) an inverse relation between capital-labor ratio and population growth. Higher monetary growth increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, and per capita output. This reverse Tobin e.ect is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule is a "distorted Friedman rule".

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File URL: ftp://www.ceistorvergata.it/repec/rpaper/No-22-Petrucci.pdf
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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 22.

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Length: 28
Date of creation: 17 Jun 2003
Date of revision:
Handle: RePEc:rtv:ceisrp:22
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