IDEAS home Printed from https://ideas.repec.org/a/ier/iecrev/v28y1987i3p707-30.html
   My bibliography  Save this article

Monetary Growth, Inflation, and Economic Activity in a Dynamic Macro Model

Author

Listed:
  • Turnovsky, Stephen J

Abstract

This paper analyzes the effects of an increase in the monetary growth ra te within a dynamic optimizing macroeconomic model. Both the short-ru n and long-run effects, and therefore the adjustments along the trans itional path, depend critically upon the tax structure and the firm's corresponding optimal financial decisions. With all bond financing, the effects depend upon the extent to which interest payments are tax deductible for corporations. If this is sufficiently high, the effec ts of an increase in the monetary growth rate are generally expansion ary. With low interest deductibility, or if the tax structure induces equity financing, the effects are generally contractionary. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Turnovsky, Stephen J, 1987. "Monetary Growth, Inflation, and Economic Activity in a Dynamic Macro Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 707-730, October.
    • Handle: RePEc:ier:iecrev:v:28:y:1987:i:3:p:707-30
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0020-6598%28198710%2928%3A3%3C707%3AMGIAEA%3E2.0.CO%3B2-E&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piergallini, Alessandro, 2024. "Corporate Finance and Interest Rate Policy," MPRA Paper 122021, University Library of Munich, Germany.
    2. Bianconi, Marcelo, 1995. "Inflation and the real price of equities: Theory with some empirical evidence," Journal of Macroeconomics, Elsevier, vol. 17(3), pages 495-514.
    3. Chang, Wen-ya, 1999. "Government spending, endogenous labor, and capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 23(8), pages 1225-1242, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ier:iecrev:v:28:y:1987:i:3:p:707-30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/deupaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.