Anticipated Inflation in a Monetary Economy with Endogenous Growth

Wen‐Ya Chang and Ching-chong Lai

Economica, 2000, vol. 67, issue 267, 399-417

Abstract: This paper makes a new attempt to investigate the role of anticipatedmonetary growth in economic growth. Combining the Barro (1990)–Rebelo (1991)‐type endogenous growth model with Sidrauski's (1967) framework, we show that the pre‐announcement of money supply behaviour may have significant effects on the rate of growth during the transition process. The key factor indetermining adjustment patterns of the economy to anticipated monetary changes is the degree of relative risk aversion. However, changes in the rate of monetary growth do not affect the rate of long‐run growth regardless of the degree of relative risk aversion.

Date: 2000
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