Anticipated policy and endogenous growth in a small open monetary economy

Shaw, Ming-fu; Lai, Ching‐chong; Chang, Wen‐Ya

doi:10.1016/j.jimonfin.2005.04.003

Cited by 5 publications

(7 citation statements)

References 71 publications

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“…Defining c k and m k as χ (the consumption-to-capital ratio) and ω (the real money holdings-to-capital ratio), we have the following autonomous dynamic system from Equations (13), (14), (15), and (16) …”

Section: Dynamicsmentioning

confidence: 99%

Government Expenditure Financing in the Money-in-the-Production-Function Model

Kaneko¹,

Matsuzaki²

2018

TEL

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In this study, we consider a scenario in which the government resorts to an income and inflation tax to finance its expenditures in the money-in-theproduction-function model. We show that a financing shift from the inflation tax to the income tax increases the real money holdings-to-capital ratio because the accumulation of capital is less favorable than holding money. We also find that a country's economic growth rate is maximized if all government expenditures are financed through an income tax. For welfare maximization, the government should set the income tax rate higher than the growth maximizing tax rate and reimburse the excess revenue using money contraction.

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Section: Dynamicsmentioning

confidence: 99%

Government Expenditure Financing in the Money-in-the-Production-Function Model

Kaneko¹,

Matsuzaki²

2018

TEL

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“…Nonetheless, the transitional dynamics of macroeconomic variables is not examined in Palokangas (1997). Shaw et al (2005) investigate the long-term as well as transitional effects of an anticipated domestic credit expansion. They point out that money is economic growth-retarding in both the intermediate term and the long run.…”

Section: Introductionmentioning

confidence: 99%

“…They point out that money is economic growth-retarding in both the intermediate term and the long run. A common feature in Palokangas (1997) and Shaw et al (2005) is that they both focus on the effect of a single monetary rule and are silent on other important monetary rules that are currently implemented in many industrial and developing countries.…”

Section: Introductionmentioning

confidence: 99%

“…During the development of the literature on money and endogenous growth, it may appear strange that little attention was paid to an open-economy setting. The existing literature on monetary policy in open-economy models includes Palokangas (1997) and Shaw et al (2005). Palokangas (1997) analyzes the effect of an unanticipated increase in the nominal interest rate on the long-run economic growth rate.…”

Section: Introductionmentioning

confidence: 99%

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Monetary Rules and Endogenous Growth in an Open Economy

Lai

Chin

2012

Macroecon. Dynam.

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This paper develops a monetary endogenous growth model for an open economy. The salient feature of the model is that it is able to deal with various monetary policy rules, including money growth rate targeting, inflation rate targeting, and nominal income growth rate targeting. It is found that a rise in the pegged rate may either increase or decrease the balanced-growth rate under regimes of both money growth rate targeting and nominal income growth targeting. However, a rise in the pegged rate is sure to depress the balanced-growth rate under the regime of inflation rate targeting. It is also found that money growth rate targeting is fundamentally equivalent to nominal income growth rate targeting if a specific restriction is imposed, and inflation rate targeting is not qualitatively equivalent to either money growth rate targeting or nominal income growth rate targeting.

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“…Along this standpoint, in this study we view interest-rate rules as a policy regime. 5 Some characteristics of our framework are similar to those of Shaw et al (2005). 6 Benhabib et al (2001aBenhabib et al ( ,b, 2003) also adopt such a modeling strategy, abstracting uncertainty from their models.…”

Section: Introductionmentioning

confidence: 99%