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Endogenous Growth and Real Effects of Monetary Policy: R&D and Physical Capital Complementarities
Author(s) -
GIL PEDRO MAZEDA,
IGLÉSIAS GUSTAVO
Publication year - 2020
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12632
Subject(s) - economics , monetary policy , monetary economics , inflation (cosmology) , real interest rate , physical capital , context (archaeology) , investment (military) , interest rate , capital (architecture) , endogenous growth theory , real gross domestic product , capital accumulation , macroeconomics , capital intensity , human capital , paleontology , history , physics , archaeology , politics , theoretical physics , political science , law , biology , economic growth
We study the real long‐run effects of the structural stance of monetary policy and of inflation, in the context of a monetary growth model where R&D is complemented with physical capital accumulation. We look into the effects on a set of real macroeconomic variables that have been of interest to policymakers—the economic growth rate, real interest rate, physical investment rate, capital‐to‐labor ratio, R&D intensity, and velocity of money. These variables have been previously analyzed from the perspective of different, separated, strands of the theoretical and empirical literature. Additionally, we analyze the long‐run relationship between inflation and both the effectiveness of real industrial‐policy shocks and the market structure, assessed namely by average firm size. We present novel cross‐country evidence on the empirical relationship between the latter and long‐run inflation.