Inflation Aversion and the Growth-Inflation Relationship

Rangan Gupta and Philton Makena (philton.makena@gmail.com)
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Philton Makena: Department of Economics, University of Pretoria, Pretoria, South Africa

No 201920, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper re-examines the theoretical relationship between inflation and output growth by introducing inflation aversion in a standard overlapping generations monetary endogenous growth model with productive public expenditure. We show that when the time preference parameter is a negative function of expected money growth rate, then the theoretical growth-inflation relationship that emerges is “hump-shaped”. This finding is consistent with recent empirical literature.

Keywords: Inflation; Inflation Aversion; Endogenous Growth (search for similar items in EconPapers)
JEL-codes: E31 O42 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2019-03
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Citations: View citations in EconPapers (1)

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Journal Article: Inflation Aversion and the Growth-Inflation Relationship (2019)
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