Inflation and balanced-path growth with alternative payment mechanisms

Gillman, Max and Kejak, Michal 2005. Inflation and balanced-path growth with alternative payment mechanisms. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University. Available at: http://business.cardiff.ac.uk/research/working-pap...

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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.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	Human capital; cash-in-advance; interest-elasticity; credit production
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	19 Mar 2016 23:14
URI:	https://orca.cardiff.ac.uk/id/eprint/43850

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