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Anticipated Inflation, Liquidity Costs and the Tobin Effect
Author(s) -
Petrucci Alberto
Publication year - 1999
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/1468-0300.00011
Subject(s) - economics , market liquidity , inflation (cosmology) , endogenous growth theory , monetary economics , consumption (sociology) , capital (architecture) , tobin's q , capital accumulation , macroeconomics , human capital , market economy , social science , physics , archaeology , sociology , theoretical physics , history
This paper analyses the steady‐state effects of inflation on capital accumulation within an optimizing monetary growth model with liquidity costs and an endogenous labour supply. It is assumed that consumption and leisure are perfect complements in the preferences of the representative agent. The particular environment considered, despite the results obtained by the growing literature on inflation and growth with endogenous labour effort, gives support to the Tobin effect, i.e. a positive effect of the money growth rate on capital, labour and output. (J.E.L.: O42).