• Corpus ID: 15849577

Liquidity Effects and the Welfare Costs of Inflation in an Endogenous Growth Model

  title={Liquidity Effects and the Welfare Costs of Inflation in an Endogenous Growth Model},
  author={Carsten Folkertsma},
The paper has two subjects. The first subject is the development of a monetary general equilibrium model with endogenous growth. By combining the two-sector endogenous growth model and the limited participation approach, the model is able to explain the empirically observed liquidity effect of an expansionary monetary policy. The second subject is the effect of inflation on growth and economic welfare. It is shown that the traditional approach to measure the welfare costs of inflation may be… 
1 Citations

Figures and Tables from this paper

Performance of Core Inflation Measures
This paper assesses the performance of core inflation measures based on the structural VAR approach. Since core or monetary inflation is not directly observable, we develop a monetary general


Endogenous growth and the welfare costs of inflation: a reconsideration
Liquidity Effects and the Monetary Transmission Mechanism
Several recent papers provide strong empirical support for the view that an expansionary monetary policy disturbance generates a persistent decrease in interest rates and a persistent increase in
Inflation, Welfare, and the Time-Costs of Transacting
The costs of inflation are assessed using an endogenous growth macroeconomic model in which money reduces the time-costs of transacting. Inflation reduces growth in the model, which supports recent
Sticky Price and Limited Participation Models of Money: A Comparison
This paper provides new evidence that models of the monetary transmission mechanism should be consistent with at least the following facts. In response to a contractionary monetary policy shock, the
The Welfare Cost of Inflation in General Equilibrium
This paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions. Although individually none of the distortions is very large, they combine to
Transitional and Steady-state Costs of Disinflation When Growth is Endogenous
In a monetary version of the Uzawa (1965)-Lucas (1988) model of endogenous growth, this paper illustrates how a credible policy of rapid disinflation can induce temporary declines in employment and
Computable general equilibrium models and monetary policy advice
This paper argues that variations of extant general-equilibrium monetary models are capable of generating real-time economic forecasts comparable in accuracy to those generated under the standard
Asymmetric information, financial intermediation, and business cycles
Summary. This incorporates a debt contracting problem with asymmetric information into a standard monetary business cycle model. The model incorporates a limited participation assumption in order to
R&D Tax Policy During the Eighties: Success or Failure?
R&D Tax policy in the United States during the nineteen-eighties is evaluated. with particular emphasis placed on quantifying the impact of the R&D tax credit on the R&D investment of manufacturing