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Money and growth through innovation cycles with leisure

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  • Wan, Jing
  • Zhang, Jie

Abstract

We study monetary policy with growth through innovation cycles and leisure. If consumption is cash constrained, increasing money growth for lower income taxes increases labor, output, investment, innovation, and growth and amplifies fluctuations on a period-two-cycle path. It induces convergence to the balanced-growth path at sufficiently high money growth rates. If investment for innovation and intermediate production is also cash constrained, the effects of money on labor, investment, innovation, and growth become negative at sufficiently high money growth rates.

Suggested Citation

  • Wan, Jing & Zhang, Jie, 2016. "Money and growth through innovation cycles with leisure," Economics Letters, Elsevier, vol. 148(C), pages 23-26.
    • Handle: RePEc:eee:ecolet:v:148:y:2016:i:c:p:23-26
    DOI: 10.1016/j.econlet.2016.09.009
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    References listed on IDEAS

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    More about this item

    Keywords

    Money; Labor; Innovation; Investment; Growth; Cycles;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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