Inflation uncertainty and growth in a cash-in-advance economy

• 成果类型: Article
• 署名作者: Dotsey, M; Sarte, PD
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(00)00005-2
• 发表日期: 2000
• 页码: 631-655
• 关键词: economic growth; inflation; uncertainty

摘要

This paper analyzes the effects of inflation variability on economic growth in a model where money is introduced via a cash-in-advance constraint. In this setting, we find that inflation adversely affects long-run growth, even when the cash-in-advance constraint applies only to consumption. At the same time, we find that inflation and growth are positively related in the short run. Furthermore, variability increases average growth through a precautionary savings motive. Since inflation and inflation variability tend to be highly correlated, the presence of uncertainty attenuates the negative long-run relationship between inflation and real growth. It also provides a partial rationale for the apparent lack of robustness in cross-country regressions of growth and inflation, (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: E13; O42.