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Inflation, variability, and the evolution of human capital in a model with transactions costs

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  • Varvarigos, Dimitrios

Abstract

In a monetary growth model, I show that average inflation inhibits growth while inflation volatility enhances it. The effect of nominal volatility on human capital accumulation depends on the response of money demand and the corresponding extent of transactions costs rather than from a direct, precautionary motive.

Suggested Citation

  • Varvarigos, Dimitrios, 2008. "Inflation, variability, and the evolution of human capital in a model with transactions costs," Economics Letters, Elsevier, vol. 98(3), pages 320-326, March.
    • Handle: RePEc:eee:ecolet:v:98:y:2008:i:3:p:320-326
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    References listed on IDEAS

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    1. Dotsey, Michael & Sarte, Pierre Daniel, 2000. "Inflation uncertainty and growth in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 631-655, June.
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    5. Jha, Sailesh K. & Wang, Ping & Yip, Chong K., 2002. "Dynamics in a transactions-based monetary growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 611-635, April.
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    Cited by:

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    2. Barbara Annicchiarico & Luisa Corrado & Alessandra Pelloni, 2011. "Long‐Term Growth And Short‐Term Volatility: The Labour Market Nexus," Manchester School, University of Manchester, vol. 79(s1), pages 646-672, June.
    3. Annicchiarico, Barbara & Pelloni, Alessandra & Rossi, Lorenza, 2011. "Endogenous growth, monetary shocks and nominal rigidities," Economics Letters, Elsevier, vol. 113(2), pages 103-107.
    4. Barbara Annicchiarico & Alessandra Pelloni, 2014. "Productivity growth and volatility: how important are wage and price rigidities?," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 306-324, January.
    5. Abbi M Kedir & Nor Yasmin Mhd Bani, 2012. "Panel Data Evidence on the Role of Education in the Growth-Volatility Relationship," Discussion Papers in Economics 12/04, Division of Economics, School of Business, University of Leicester.
    6. Annicchiarico, Barbara & Rossi, Lorenza, 2015. "Taylor rules, long-run growth and real uncertainty," Economics Letters, Elsevier, vol. 133(C), pages 31-34.
    7. Neanidis, Kyriakos C. & Savva, Christos S., 2013. "Macroeconomic uncertainty, inflation and growth: Regime-dependent effects in the G7," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 81-92.
    8. Annicchiarico, Barbara & Pelloni, Alessandra, 2021. "Innovation, Growth, And Optimal Monetary Policy," Macroeconomic Dynamics, Cambridge University Press, vol. 25(5), pages 1175-1198, July.
    9. Dimitrios Varvarigos, 2007. "Volatile public spending in a model of money and sustainable growth," Discussion Paper Series 2007_18, Department of Economics, Loughborough University, revised Jul 2007.
    10. Annicchiarico, Barbara & Rossi, Lorenza, 2013. "Optimal monetary policy in a New Keynesian model with endogenous growth," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 274-285.
    11. Barbara Annicchiarico & Luisa Corrado & Alessandra Pelloni, 2008. "Volatility, Growth and Labour Elasticity," Working Paper series 32_08, Rimini Centre for Economic Analysis.
    12. B. Balaji & S. Raja Sethu Durai & M. Ramachandran, 2018. "Spillover Effects of Real and Nominal Uncertainties in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(1), pages 143-162, December.
    13. Ibrahima Dia & Henri Atangana Ondoa & Idrissa Ouedraogo, 2024. "Does economic freedom foster education in Sub‐Saharan Africa?," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 939-972, March.

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