Endogenous Growth, Monetary Shocks and Nominal Rigidities
13 Pages Posted: 9 Mar 2011
Date Written: February 1, 2011
We introduce endogenous growth in an otherwise standard NK model with staggered prices and wages. Some results follow: (i) monetary volatility negatively affects long-run growth; (ii) the relation between nominal volatility and growth depends on the persistence of the nominal shocks and on the Taylor rule considered; (iii) a Taylor rule with smoothing increases the negative effect of nominal volatility on mean growth.
Keywords: Growth, volatility, business cycle, monetary policy
JEL Classification: E32, E52, 042
Suggested Citation: Suggested Citation