Growth-Effects of Inflation Targeting: The Role of Financial Sector Development

Rangan Gupta

Annals of Economics and Finance, 2011, vol. 12, issue 1, 65-87

Abstract: The paper develops a dynamic general equilibrium monetary endogenous growth model. The closed economy model is inhabited by consumers, firms, a Cournotian monopolistically competitive banking system, besides, an inflationtargeting monetary authority, and, in turn, analyzes the effect of a tight monetary (disinflationary) policy on growth. We show that the effect of a lower inflation target on growth is ambiguous, with the ultimate effect depending on the initial levels of growth and the individual bank size, besides, a whole host of structural parameters defining the preferences and the production structure of the economy.

Keywords: Inflation targeting; Economic growth; Financial sector development (search for similar items in EconPapers)
JEL-codes: E31 E44 E52 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://aeconf.com/Articles/May2011/aef120105.pdf (application/pdf)
http://down.aefweb.net/AefArticles/aef120105.pdf (application/pdf)

Related works:
Working Paper: Growth-Effects of Inflation Targeting: The Role of Financial Sector Development (2006)
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:cuf:journl:y:2011:v:12:i:1:p:65-87

Access Statistics for this article

Annals of Economics and Finance is currently edited by Heng-fu Zou

More articles in Annals of Economics and Finance from Society for AEF Contact information at EDIRC.
Bibliographic data for series maintained by Qiang Gao ().