Money, Endogenous Fertility and Economic Growth

28 Pages Posted: 17 Jun 2003

See all articles by Alberto Petrucci

Alberto Petrucci

LUISS Guido Carli - Department of Economics

Date Written: June 2003


This paper analyzes the issue of money superneutrality through an intertemporal optimizing model of capital accumulation with endogenous fertility, i.e. endogenous population growth. Two elements of this setup invalidate money superneutrality: i) a demand for fertility that depends on real money balances, and ii) an inverse relation between capital-labor ratio and population growth. Higher monetary growth increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, and per capita output. This reverse Tobin e.ect is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule is a "distorted Friedman rule".

Keywords: Money superneutrality, Inflation, Fertility, Capital accumulation

JEL Classification: O42, O11, J13

Suggested Citation

Petrucci, Alberto, Money, Endogenous Fertility and Economic Growth (June 2003). CEIS Tor Vergata - Research Paper Series No. 22; and FEEM Working Paper No. 26.99. Available at SSRN: or

Alberto Petrucci (Contact Author)

LUISS Guido Carli - Department of Economics ( email )

Viale Romania, 32
Rome, 00197
+39 06 8522 5737 (Phone)
+39 06 8522 5949 (Fax)


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