Money and Growth: Some Old Theorems from a New Perspective

Jeffrey Carmichael

The Economic Record, 1982, vol. 58, issue 4, 386-394

Abstract: This paper reconsiders the effect of the rate of monetary expansion on the real growth path of the economy. The analysis uses an overlapping‐generations model with production and intergenerational bequests. The first objective is to define the set of necessary conditions under which money will be superneutral. These conditions are shown to be very restrictive. The second objective is to show that, if money is not superneutral, Tobin's original intuition on the subject, namely that a rise in the rate of monetary expansion raises the capital intensity, can be derived from an optimizing model under certain conditions.

Date: 1982
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