Money, Social Status and Endogenous Growth in a Generalized Cash-in-Advance Model∗
نویسندگان
چکیده
This paper examines the equilibrium growth effect of money/inflation within a standard one-sector AK model of endogenous growth with the most generalized cash-in-advance constraint and wealth-enhanced preferences for social status. We show that the sign for the correlation between money and output growth depends crucially on (i) the liquidityconstrained ratio of consumption to investment expenditures, and (ii) how the shadow price of physical capital responds to a change in the monetary growth rate. This moneygrowth correlation, as well as the growth effect of social status, turns out to be closely related to the local stability properties of the economy’s balanced growth path(s).
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