publication . Preprint . 2013

Inflation gifts and endogenous growth through learning-by-doing

Andrea Vaona;
Open Access
  • Published: 01 May 2013
Abstract
We investigate the link between inflation, growth and unemployment nesting a model of fair wages into one of endogenous growth of learning by doing and assuming that firms protect wages' purchasing power against inflation in exchange of worker's effort. Unemployment decreases with higher inflation and real growth rates. These effects tends to vanish as inflation and growth increase. Depending on the assumptions on learning-by-doing mechanisms, the effect of inflation on growth can be either nil or positive, but tiny. The Appendix shows that the short run effects of a monetary shocks mirror the long-run effects of inflation.
Subjects
free text keywords: efficiency wages, money growth, long-run Phillips curve, trend inflation, jel:E3, jel:E2, jel:E4, jel:E5
29 references, page 1 of 2

[2] Akerlof, George A. (1982). “Labor Contracts as Partial Gift Exchange.” Quarterly Journal of Economics 97, 543-569. [OpenAIRE]

[3] Alexopoulos, Michelle. (2004). "Unemployment and the Business Cycle." Journal of Monetary Economics 51, 277-298.

[4] Alexopoulos, Michelle. (2006). "Shirking in a Monetary Business Cycle Model." Canadian Journal of Economics 39, 689-718.

[5] Alexopoulos, Michelle. (2007). "A Monetary Business Cycle Model with Unemployment." Journal of Economic Dynamics and Control 31, 3904- 3940. [OpenAIRE]

[6] Annicchiarico Barbara , Alessandra Pelloni, Lorenza Rossi, Endogenous growth, monetary shocks and nominal rigidities, Economics Letters, Volume 113, Issue 2, November 2011, Pages 103-107, ISSN 0165-1765, 10.1016/j.econlet.2011.06.009.

[7] Anonymous and Vaona Andrea (2012), Do inflation gifts imply money illusion?" http://www.webalice.it/avaona/ Money_illusion_inflation_gifts.docx

[8] Ascari, Guido. (1998). "Superneutrality of Money in Staggered Wagesetting Models." Macroeconomic Dynamics 2, 383-400.

[9] Ascari, Guido. (2004). "Staggered Prices and Trend Inflation: Some Nuisances." Review of Economic Dynamics 7, 642-647. [OpenAIRE]

[10] Barro, Robert J. and Xavier Sala-i-Martin (1995). Economic Growth. McGraw-Hill, New York.

[11] Bewley, T. (1999). Why Wages Don't Fall During a Recession. Cambridge MA.: Harvard University Press.

[12] Blanchard, O. and Galí J. (2010). "Labor Markets and Monetary Policy: a New Keynesian Model with Unemployment." American Economic Journal: Macroeconomics 2, 1-30.

[13] Chambers, Robert G. (1988) Applied Production Analysis. Cambridge, UK: Cambridge University Press.

[14] Danthine, Jean Pierre and Kurmann, André. (2004). Fair Wages in a New Keynesian Model of the Business Cycle. Review of Economic Dynamics 7. 107-142.

[15] Danthine, Jean Pierre and Kurmann, André. (2008). "The Macroeconomic Consequences of Reciprocity in Labor Relations." Scandinavian Journal of Economics 109, 857-881.

[16] Danthine, Jean Pierre and Kurmann, André. (2010). "The Business Cycle Implications of Reciprocity in Labor Relations." Journal of Monetary Economics 57, 837-850.

29 references, page 1 of 2
Powered by OpenAIRE Open Research Graph
Any information missing or wrong?Report an Issue