Growth and wage effects of the monetary policy

We analyse the effects of the monetary policy (inflation) on a set of real macroeconomic variables, via cash‐in‐advance (CIA) constraints and an ‘inflation‐rate’ complexity R&D effect in a knowledge‐driven horizontal R&D growth model with skilled and unskilled labour. The model is calibrated...

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Bibliographic Details
Published in:	International journal of finance and economics Vol. 27; no. 4; pp. 4058 - 4084
Main Author:	Afonso, Óscar
Format:	Journal Article
Language:	English
Published:	Chichester, UK John Wiley & Sons, Ltd 01-10-2022 Wiley Periodicals Inc
Subjects:	CIA constraints Inflation Monetary policy real macroeconomic variables semi‐endogenous growth ‘Inflation‐rate’ complexity effect
Online Access:	Get full text
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Summary:	We analyse the effects of the monetary policy (inflation) on a set of real macroeconomic variables, via cash‐in‐advance (CIA) constraints and an ‘inflation‐rate’ complexity R&D effect in a knowledge‐driven horizontal R&D growth model with skilled and unskilled labour. The model is calibrated to the U.S. economy. We find that the monetary policy has no effect on firm‐size growth, but a negative impact on economic growth, real interest rate, skill premium, R&D intensity, and welfare; positive influence on the velocity of money. The sign of the theoretical relationships is in line with the dominant empirical evidence.
Bibliography:	Funding information CEFUP is financed by Portuguese public funds through FCT – Foundation for Science and Technology, IP, in the framework of the project with references UIDB / 04105/2020 and UIDP / 04105/2020
ISSN:	1076-9307 1099-1158
DOI:	10.1002/ijfe.2359