The Equality of the Natural Rates of Interest, Inflation and Economic growth, and Its Implications for Monetary Policy

André Costa

MPRA Paper from University Library of Munich, Germany

Abstract: This paper considers the role of savings as that of managing the tradeoff between the amount consumed of present varieties and the investment into improving the quality of varieties in the future. Under this framework, it is shown that the rates of interest, inflation and economic growth are equal and derived from the same phenomenon: innovation. Consequently, this leads to a monetary policy recommendation, namely to attempt to bind the rates of inflation and interest to the directly observable real rate of economic growth.

Keywords: Growth; theory (search for similar items in EconPapers)
JEL-codes: E20 E21 E22 E4 E40 E43 E50 E52 (search for similar items in EconPapers)
Date: 2025-06-06
New Economics Papers: this item is included in nep-cba and nep-mon
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