In ation , Investment and Growth : a Money and Banking Approach

@inproceedings{Gillman2008InA,
  title={In ation , Investment and Growth : a Money and Banking Approach},
  author={Max Otto Gillman and Michal Kejak},
  year={2008}
}
Output growth, investment and the real interest rate are all found empirically to be negatively a¤ected by in‡ation. But a seeming puzzle arises of opposite Tobin-like in‡ation e¤ects because theory indicates a negative Tobin e¤ect when investment falls and a positive Tobin e¤ect when the real interest rate rises. We de…ne in‡ation’s Tobin e¤ect more speci…cally in terms of the e¤ect on the capital to e¤ective labor ratio and resolve the puzzle by showing the simultaneous occurrence of all… CONTINUE READING

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