Inflation and Balanced-Path Growth with Alternative Payment Mechanisms

Max Gillman and Michal Kejak ()

No E2005/15, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: The paper shows that contrary to conventional wisdom an endogenous growth economy with human capital and alternative payment mechanisms can robustly explain major facets of the long run inflation experience. A negative inflation-growth relation is explained, including a striking non-linearity found repeatedly in empirical studies. A set of Tobin (1965) effects are also explained and, further, linked in magnitude to the growth effects through the interest elasticity of money demand. Undisclosed previously, this link helps fill out the intuition of how the inflation experience can be plausibly explained in a robust fashion with a model extended to include credit as a payment mechanism.

Keywords: Human capital; cash-in-advance; interest-elasticity; credit production (search for similar items in EconPapers)
JEL-codes: E22 E31 O42 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-12
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published in Economic Journal , Vol 115 (January): 247-270.

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Related works:
Journal Article: Inflation and Balanced-Path Growth with Alternative Payment Mechanisms (2005)
Working Paper: Inflation and Balanced-Path Growth with Alternative Payment Mechanisms (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2005/15

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