Money Supply and Capital Accumulation on the Transition Path Revisited

Journal of Money, Credit and Banking, Volume (Year): 42 (2010), Issue (Month): 6 (09), Pages: 1173-1184

26 Pages Posted: 31 Jan 2014

See all articles by Rubens Penha Cysne

Rubens Penha Cysne

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças

David Turchick

Department of Economics, University of São Paulo (FEA-USP)

Date Written: October 1, 2009

Abstract

Fischer (1979) and Asako (1983) analyze the sign of the correlation between the growth rate of money and the rate of capital accumulation on the transition path. Both plug a CRRA utility (based on a Cobb-Douglas and a Leontief function, respectively) into Sidrauski’s model – yet return contrasting results. The present analysis, by using a more general CES utility, presents both of those settings and conclusions as limiting cases, and generates economic …gures more consistent with reality (for instance, the interest-rate elasticity of the money demands derived from those previous works is necessarily 1 and 0, respectively).

Keywords: Capital Accumulation, Monetary Growth, Money Supply, Superneutrality, Transition Path

JEL Classification: E40, E50, E60

Suggested Citation

Cysne, Rubens Penha and Turchick, David, Money Supply and Capital Accumulation on the Transition Path Revisited (October 1, 2009). Journal of Money, Credit and Banking, Volume (Year): 42 (2010), Issue (Month): 6 (09), Pages: 1173-1184, Available at SSRN: https://ssrn.com/abstract=2387531

Rubens Penha Cysne (Contact Author)

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil
+55-21-552-5099 (Phone)
+55-21-536-9409 (Fax)

David Turchick

Department of Economics, University of São Paulo (FEA-USP) ( email )

Av. Prof. Luciano Gualberto 908
Sao Paulo SP, 05508-900
Brazil

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