Inflation and human capital formation: theory and panel data evidence

Freddy Heylen, A. Schollaert (), Gerdie Everaert and L. Pozzi ()
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L. Pozzi: -

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: Existing monetary growth theories predict either negative or neutral effects from inflation on human capital. In this paper we develop a simple alternative model, which can generate positive effects. Our empirical analysis for 93 countries in 1975-1995 tends to confirm these positive effects. Using recent GMM panel data procedures, we find that rising inflation basically stimulates human capital. A robust negative effect can be observed only at extremely high inflation rates. A representative threshold may be 100%. For inflation rates below 15%, the effect of rising inflation seems insignificant. The latter result can also be rationalized from our model.

Keywords: Human capital; education; inflation; monetary growth models; panel data (search for similar items in EconPapers)
JEL-codes: E31 J24 O40 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2003-04
New Economics Papers: this item is included in nep-dev, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Inflation and human capital formation: theory and panel data evidence (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:03/174

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