Effects of Monetary Policy in a Model with Cash-in-Advance Constraints on R&D and Capital Accumulation

Daiki Maeda and Yuki Saito

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: To examine the effect of monetary policy on economic growth, we formulate an endogenous growth model with cash-in-advance constraints on R&D and capital accumulation as endogenous growth engines. Within this framework, we show that the relationship between economic growth and the nominal interest rate can be an inverted-U shape. Moreover, we demonstrate that the welfare-maximizing level of the nominal interest rate is larger than the growth-rate-maximizing level of the nominal interest rate. Finally, we calibrate the model using data for the US to evaluate the growth-rate-maximizing level of the nominal interest rate quantitatively.

Date: 2020-02, Revised 2025-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/DP1076RR.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1076rr

Access Statistics for this paper

More papers in ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka Contact information at EDIRC.
Bibliographic data for series maintained by Librarian ().