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
Date Written: October 1, 2009
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 Sidrauskis 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: Suggested Citation