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Innovation and Inequality in a Monetary Schumpeterian Model with Heterogeneous Households and Firms

Angus Chu (), Guido Cozzi (), Haichao Fan, Yuichi Furukawa () and Chih-Hsing Liao ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study develops a Schumpeterian growth model with heterogeneous households and heterogeneous firms to explore the effects of monetary policy on innovation and income inequality. Household heterogeneity arises from an unequal distribution of wealth. Firm heterogeneity arises from random quality improvements and a cost of entry. We find that under endogenous firm entry, inflation has inverted-U effects on economic growth and income inequality. We also calibrate the model for a quantitative analysis and find that the model is able to match the growth-maximizing inflation rate and the inequality-maximizing inflation rate that we estimate using cross-country panel data.

Keywords: inflation; income inequality; economic growth; heterogeneity (search for similar items in EconPapers)
JEL-codes: D3 E41 O3 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ino, nep-mac and nep-mon
Date: 2018-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/84711/1/MPRA_paper_84711.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/86530/1/MPRA_paper_86530.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/90475/1/MPRA_paper_90475.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/92536/1/MPRA_paper_92536.pdf revised version (application/pdf)

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Journal Article: Innovation and Inequality in a Monetary Schumpeterian Model with Heterogeneous Households and Firms (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:84711

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