The Cash-In-Advance Constraint in Monetary Growth Models with Labor Market Search
- We study the sensitivity of the inflation–growth trade-off in monetary growth models to the introduction of search frictions in the labor market. We consider three types of endogenous growth models: (1) the AK model, (2) the Lucas supply-side model, and (3) the two-sector model of Jones and Manuelli. We show that the effects depend on the specification of the cash-in-advance constraint and the magnitude of the semi-interest elasticity of the income velocity. For the AK model, economic growth increases with higher inflation. For the other two models, growth declines for the case of the standard cash-in-advance constraint on consumption, whereas it either increases or decreases if money is introduced, as in the cash–credit good economy of Dotsey and Ireland, depending on the semi-interest elasticity of the income velocity. The welfare effects of inflation are shown to be economically significant in the presence of search unemployment.
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| Author: | Alfred MaußnerGND, Burkhard HeerGND |
|---|---|
| URN: | urn:nbn:de:bvb:384-opus4-377861 |
| Frontdoor URL | https://opus.bibliothek.uni-augsburg.de/opus4/37786 |
| ISSN: | 1365-1005OPAC |
| Parent Title (English): | Macroeconomic Dynamics |
| Publisher: | Cambridge Univ. Press |
| Place of publication: | Cambridge |
| Type: | Article |
| Language: | English |
| Year of first Publication: | 2015 |
| Publishing Institution: | Universität Augsburg |
| Release Date: | 2018/01/16 |
| GND-Keyword: | Friktionelle Arbeitslosigkeit; Inflation; Wirtschaftswachstum; Kreditaufnahme |
| Volume: | 19 |
| Issue: | 1 |
| First Page: | 144 |
| Last Page: | 166 |
| Note: | Dieser Beitrag ist mit Zustimmung des Rechteinhabers aufgrund einer (DFG-geförderten) Allianz- bzw. Nationallizenz frei zugänglich. Online bereits 2013 veröffentlicht. |
| DOI: | https://doi.org/10.1017/S136510051300031X |
| Institutes: | Wirtschaftswissenschaftliche Fakultät |
| Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre | |
| Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre / Lehrstuhl für Finanzwissenschaft | |
| Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre / Lehrstuhl für Empirische Makroökonomik | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
