money and capital abstract the effects of money anticipated inflation on capital formation is a classic issue in macroeconomics previous papers adopt reduced form approaches putting money in the utility function or imposing cash in advance but using otherwise frictionless models we follow instead a literature that tries to be explicit about the frictions making money essential this introduces new elements including a two sector structure with centralized and decentralized markets stochastic trading opportunities and bargaining these elements matter quantitatively and numerical results differ from findings in the reduced form literature the analysis also reduces a gap between microfounded monetary economics and mainstream macro

the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

the replacement problem abstract a prototypical vintage capital model of economic growth is developed where the decision to replace old technologies with new ones is modeled explicitly technological change is investment specific depreciation in this environment is an economic not a physical concept the vintage capital economy s balanced growth paths and transitional dynamics are analyzed the transitional dynamics are markedly different from the standard neoclassical growth model

equilibrium dynamics in an endogenous growth model of money and banking we construct an analytically tractable endogenous growth model of money and banking where money provides liquidity services to facilitate transactions and banks convert non reserve deposits into productive capital we examine both the long and short run effects of changes in the money growth rate or the reserve requirement ratio in response to a change in the required reserve ratio the inflation rate and the growth rates of capital real balances and consumption need not adjust monotonically along the transition path while the balanced growth equilibrium may be either a saddle or a source locally the global dynamical system exhibits flip bifurcation

anticipated policy and endogenous growth in a small open monetary economy abstract this paper analyzes the effects of a preannounced change in the growth rate of credit in a small open economy the model based on an endogenous growth model introduces the adjustment costs for investment and the role of money in the production function and highlights the dynamic behavior of an open economy we show that an increase in the rate of anticipated credit growth lowers the steady growth rate of capital real money balances and real output we also find that the rate of depreciation of the domestic currency will rise steadily toward its stationary level the anticipated domestic credit growth hence exhibits monetary nonsuperneutrality in both the rate and the level of output in the intermediate and the long run

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

an adjustment cost model of asset pricing an intertemporal asset pricing model is constructed incorporating an explicit adjustment cost technology the capital stock can be altered by investment but there are adjustment costs whi ch lower the marginal return of investment in a model involving an i nfinitely lived representative agent it is shown how changes in adju stment costs influence asset prices the term structure of real inter est rates and risk premia the results suggest that adjustment cost by causing an intertemporal consumption substitution raises the pri ces of risky stocks and risk premia and reduces long term real intere st rates copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

policy variability productive spending and growth in this paper i present two models with policy variability arising from randomness in the provision of productive public spending in the first model public spending enters as an input in output production in this case i find that the relationship between policy variability and growth depends critically on the technological parameters of the production function in the second model public spending enters as an input in the education sector of the economy in this case i find that policy variability retards growth as individuals respond to increased uncertainty by actually reducing rather than increasing their investment in human capital

friedman rule in a model with endogenous growth and cash in advance constraint this paper introduces money into an overlapping generations model with endogenous growth the model due to docquier et al 2007 exhibits a positive intergenerational externality which precludes its laissez fair equilibrium to be optimal even if the government can control the level of physical capital and set it to satisfy the modified golden rule the main message of the paper is that as long as the modified golden rule is attained friedman rule is optimal the result holds regardless of the ability of the government to internalize the externality and control the level of human capital other results include i violation of friedman rule for a different second best environment wherein human capital accumulation is controlled but not physical capital accumulation ii existence of a negative relationship between money growth rate and the economy s endogenous growth rate and iii non uniqueness of friedman rule

monetary policy banking and growth i introduction fischer and modigliani 1978 exhaustively list the costs associated with inflation in recent years a growing body of evidence is consistent with the notion that slower output growth may be added to the fischer modigliani list specifically analyses by kormendi and meguire 1985 fisher 1991 degregario 1992 gomme 1993 wynne 1993 barro 1996 and others find a negative correlation between the inflation rate and output growth both across countries and over time 1 moreover the studies consistently find that the growth rate response to a change in the inflation rate is quite large the different studies produce a range of correlation coefficients a country in which the inflation rate is 10 will grow between 1 4 and 3 4 percentage points slower than a country in which the inflation rate is 0 the purpose of this paper is to determine whether a reasonably calibrated model economy can account for the size of the regression coefficients the model economy is a modified version of a member of the ak class in which bank deposits are used to finance capital accumulation in this model economy fiat money is valued because the bank is required to hold reserves against its deposits throughout this paper bank deposits is used in a narrow sense to include only those deposits against which a reserve requirement applies because monetary policy has two tools at its disposal it is possible to conduct two separate policy experiments the results from these experiments particularly the inflation rate experiment sheds light on the potential importance on the share of investment financed through bank deposits researchers have long been interested in the interaction between financing and growth schumpeter 1911 argued that the financial sector more specifically its stage of development affected a country s growth rate 2 cameron 1967 described financial development in scotland england and france in the late 18th and early 19th centuries cameron concluded that scotland and england entered the industrial revolution ahead of france because it had the financial infrastructure capable of financing capital accumulation on the needed scale king and levine 1993 find that countries with more developed financial sectors tend to grow faster than countries with less developed financial sectors it seems natural therefore to investigate whether the means of financing can yield any insights into the inflation growth relationship other researchers have also quantified the effect that movements in the inflation rate has on the growth rate in particular jones and manuelli 1995 use several variants of economies in which people hold fiat money to satisfy a cash in advance constraint they demonstrate that large growth rate effects cannot be accounted for in these model economies in these models inflation does not materially alter capital accumulation rates affecting instead the allocation between the credit good and cash good purchases jones and manuelli find small growth rate effects in an economy in which the tax code has nominally denominated depreciation rates in two papers that focus on inflation and growth chari jones and manuelli 1995 1996 consider economies in which capital accumulation can be financed through either bank deposits or directly as in the economy specified in this paper reserve requirements are applied against bank deposits agents can avoid the inflation tax by using the direct financing means more intensively consequently the growth rate effects are muted in the chari jones manuelli model economies and are too small to account for the size of the regression coefficients reported in kormendi and mcguire fischer and barro in this paper i assume that all investment is financed through bank deposits with this extreme assumption the model economy can account for the size of the growth rate effects observed in the data 3 thus there is a potentially useful lesson learned from the quantitative results in the all bank financing economy and those reported in chari jones manuelli

monopolistic competition increasing returns to scale and the welfare costs of inflation abstract this paper introduces monopolistic competition and increasing returns to scale into a monetary real business cycle rbc model to re estimate the welfare costs of inflation we first calibrate the model and show that it is capable of generating the observed aggregate fluctuations even when there are no shocks to the fundamentals in particular we demonstrate that this model matches the stylized u s business cycles facts as well as two more standard models then we find that in this model the scale parameters and the intensity of competition significantly affects the welfare cost of inflation specifically the cost is considerably higher than that in a standard rbc model with competitive markets and constant returns moreover the stronger the increasing returns and the less intense the competition the higher the welfare costs these results are confirmed in a number of model specifications

current real business cycle theories and aggregate labor market fluctuations hours worked and the return to working are weakly correlated traditionally the ability to account for this fact has been a litmus test for macroeconomic models existing real business cycle models fail this test dramatically we modify prototypical real business cycle models by allowing government consumption shocks to influence labor market dynamics this modification can in principle bring the models into closer conformity with the data our empirical results indicate that it does

the demand for money financial innovation and the welfare cost of inflation an analysis with household data we use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized baumol tobin model our data set contains information on average currency deposits and other interest bearing assets the number of trips to the bank the size of withdrawals and ownership and use of atm cards we model the demand for currency accounting for adoption of new transaction technologies and the decision to hold interest bearing assets the interest rate and expenditure flow elasticities of the demand for currency are close to the theoretical values implied by standard inventory models however we find significant differences between individuals with an atm card and those without the estimates of the demand for currency allow us to calculate a measure of the welfare cost of inflation analogous to bailey s triangle but based on a rigorous microeconometric framework the welfare cost of inflation varies considerably within the population but never turns out to be very lar

a banking explanation of the us velocity of money 1919 2004 the paper shows that us gdp velocity of m1 money has exhibited long cycles around a 1 25 per year upward trend during the 1919 2004 period it explains the velocity cycles through shocks constructed from a dsge model and annual time series data ingram et al 1994 model velocity is stable along the balanced growth path which features endogenous growth and decentralized banking hat produces exchange credit positive shocks to credit productivity and money supply increase velocity as money demand falls while positive goods productivity shock raises temporary output and velocity the paper explains such velocity volatility at both business cycle and long run frequencies with filtered velocity turning negative starting during the 1930s and the 1987 crashes and again around 2003 results suggest that the money and credit shocks appear to be more important for velocity during less stable times and the goods productivity shock more important during stable times

tightening environmental standards the benefit cost or the no cost paradigm ms ff ichael porter and claas van der linde have written a paper that is interesting and to us at least somewhat astonishing it is a defense of environmental regulation indeed an invitation to more stringent regulation that makes essentially no reference to the social benefits of such regulation this approach contrasts starkly with the methods that economists and other policy analysts have traditionally used when assessing environmental or other regulatory programs the traditional approach consists of comparing the beneficial effects of regulation with the costs that must be borne to secure these benefits for environmental regulation the social benefits include the reductions in morbidity or premature mortality that can accompany cleaner air the enhanced recreational opportunities that can result from water quality improvements the increased land values that might attend the cleanup of a hazardous waste site the enhanced vitality of aquatic ecosystems that might follow reductions in agricultural pesticide use or any of the other potentially significant benefits associated with tighter standards from this benefit cost approach emerges the standard tradeoff discussed in virtually every economics textbook porter and van der linde deny the validity of this approach to the analysis of environmental regulation claiming it to be an artifact of what they see as a static mindset in their view economists have failed to appreciate the capacity of

international evidence on the historical properties of business cycles we contrast properties of real quantities with those of price levels and stocks of money for ten countries over the last century although the magnitude of output fluctuations has varied across countries and periods relations among real quantities have been remarkably uniform properties of price levels however exhibit striking differences between periods inflation rates are more persistent after world war ii than before and price level fluctuations are typically procyclical before world war ii and countercyclical afterward fluctuations in money are less highly correlated with output in the postwar period but are no more persistent than in earlier periods jel e32 e31

total quality environmental management and total cost assessment an exploratory study abstract this study addresses one of the major perceived barriers to total quality environmental management tqem total cost assessment tca managers have difficulty assessing the impact of tqem programs because of the lack of appropriate measures in order for tqem investments to be given serious consideration a process is required for measuring monitoring and evaluating tqem by appropriately including all the environmental costs and savings for each investment option after reviewing the background of tqem and frameworks for capturing environmental costs an opportunity emerges for research involving the use of tqem and tca this research presented in this study develops a framework for identifying and formulating a set of cost measures associated with tqem investments the framework serves as a basis for comparing environmental cost measures used among several large us companies two major outputs yielded by this research are 1 a catalog of the various cost measures and procedures used to implement and carryout a tqem tca and 2 the tqem tca framework itself the catalog and framework will be important for later empirical assessment and modeling of tqem

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

institutionalizing sustainability a structural equation model of sustainable procurement in us public agencies abstract the rapidly growing interest in sustainable operations in practice has been mirrored by an equivalent expanding attention within the academic community yet as encouraging and significant as the recent growth in the area has been there is still much that needs to be done for instance there is surprisingly little empirical research on public sector management and on factors that might lead an organization to become more likely to adopt sustainable practices the scope of this research therefore is to explore the conditions under which a given organization is more likely to engage and prioritize sustainable procurement practices and to determine the extent to which the leadership style of the organization s top leader can explain the degree to which sustainability is promoted within a specific organization data collected with the help of a self administered survey from a random sample of us public agencies is analyzed using structural equation modeling among others the results of the empirical analysis confirm that the leadership style of an organization s top executive is positively associated with the probability that an agency will engage in sustainable procurement practices this research is among the first to attempt to provide an actionable model of adoption of sustainable procurement at an organizational level it contributes to the diffusion of research on sustainability by studying sustainable procurement practices adoption and by developing a model that draws simultaneously on systems theory stakeholder theory transformational leadership theory and institutional theory

the optimal inflation rate under schumpeterian growth abstract to analyze the relationship between inflation and economic growth we construct an endogenous growth model with creative destruction incorporating sticky prices due to menu costs price changes reduce the reward for innovation and thus lower the frequency of creative destruction central banks can maximize the growth rate by setting their inflation target at the negative of a fundamental growth rate while the optimal inflation rate may be greater than the growth maximizing inflation rate our calibrated model shows that the optimal inflation rate is close to the growth maximizing inflation rate and that a deviation from the optimal level has sizable impacts

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

theory measurement and calibration of macroeconomic models abstract calibration has become a standard tool of macroeconomics this paper extends and refines the calibration methodology along several important dimensions first accounting for home production is important both in measuring calibration targets and in organizing the data in a model consistent fashion for this reason thinking about home production is important even if the model under consideration does not include home production second investment specific technological change is included because of its strong balanced growth parameter restrictions third the measurement strategy is laid out as transparently as possible so that others can easily replicate the underlying calculations the data and calculations used in this paper are available at http clevelandfed org research models rbc index cfm

dangerous flexibility retirement reforms reconsidered flexible retirement is supposed to increase labor supply of older workers without touching the third rail of pension politics the highly unpopular increase of the retirement age while this may have intuitive appeal this paper shows that it might be wishful thinking economic theory tells us that flexible retirement policies can have a zero or positive effect on labor force participation while the effect on hours worked can be positive or negative depending on the distribution of leisure preferences thus the overall effect is ex ante unclear empirical results from nine oecd countries show that the effect on labor force participation is ex post small and positive while the effect on hours worked is negative overall there is no evidence of the desired positive effect on total labor supply rather we see evidence of a dangerous decline in total labor supply we conclude that the flexibility reforms enacted so far have failed to increase old age labor supply and delineate several alternative options to achieve this aim

welfare costs of inflation in a dynamic economy with search unemployment abstract we present a monetary general equilibrium model with labor market frictions in the form of search unemployment which is calibrated for the us economy interestingly both employment and output may even increase with the rate of inflation depending on the elasticity of labor supply considering the transition dynamics following a change in the monetary policy the optimal quarterly inflation rate is found to amount to approximately 0 6 in the benchmark case a reduction of the inflation rate from its current level to its optimal value only results in small welfare gains equal to 0 08 of total consumption

tax analysis in a real business cycle model on measuring harberger triangles and okun gaps abstract a tax distorted real business cycle model is parameterized calibrated and solved numerically in an attempt to measure the size of harberger triangles relative to okun gaps in particular the model constructed is used to study quantitatively the impact of various distortional government tax and subsidy schemes it is shown that the government can use tax policy to stabilize cyclical fluctuations and this is done for the economy being studied the benefits of implementing such a stabilization policy are calculated and compared with the size of the welfare gains realized from reducing various tax distortions

growth welfare and the size of government i introduction given the current state of political debate within the u s it would appear that making the claim a smaller government is a better government is just a mere statement of a simple fact president clinton the head of the political party which has traditionally supported a larger government has now proclaimed that the era of big government is over and has proposed fiscal programs to cut both taxes and the growth of government spending in a very real sense it has been economists who have been consensus makers on this issue numerous studies have been conducted recently estimating the growth and welfare costs of distortionary taxation 1 these studies have generally found that income and capital taxation have large welfare effects and also significant effects on growth however the potential benefits of the government purchases financed with distortionary taxes are very limited in these supply side models most often being simply ignored in these aforementioned studies government purchases do not directly provide utility to households and do not affect the productivity of firms as a result the optimal size of government in these models is zero which is a troubling property of any model being used to evaluate the effects of changes in fiscal policy in terms of cost benefit analysis by ignoring these effects previous studies have only considered the costs of a larger government but not the benefits 2 this paper develops an endogenous growth model of the u s economy in which government purchases directly affect both the utility of individuals through the provision of public consumption goods and services and the productivity of firms through the provision of public capital in a manner which is consistent with existing empirical work by aschauer 1985 1989 and munnell 1990a b among others by incorporating the full benefits of government purchases into our model the growth and welfare effects of a smaller government can be more realistically evaluated this paper proceeds as follows in section ii the endogenous growth model with human capital accumulation used in this study is described the competitive equilibrium of the model is described and calculated in section iii and the calibration of the parameters in the model is discussed in section iv in section v various fiscal policy experiments are conducted investigating the growth and welfare effects of government downsizing although this is a macroeconomic model and as such is too general to investigate the effects of specific government spending and taxation programs the results presented here do provide some broad fiscal policy guidelines 1 the effects of a smaller government depend as much on the mix of spending cuts as on the mix of tax cuts and government downsizing is not necessarily growth and welfare enhancing 2 while tax reductions by themselves can significantly increase growth and welfare simultaneous reductions in government spending and taxation are not likely to lead to large positive or negative changes in growth or welfare regardless of the exact form of the spending and tax cuts 3 reducing the size of government is less likely to increase growth and welfare if the reductions in public investment are large especially reductions in public investment which directly affect the accumulation of human capital 4 government downsizing is most likely to increase growth and welfare if the proceeds from spending cuts are used to finance reductions in capital tax rates 5 across the board spending cuts fail to maximize the potential growth and welfare benefits of government downsizing although downsizing is more likely to increase growth and welfare if the cuts pertain to all forms of government spending including transfer payments and not just government purchases ii description of the model the model developed here is similar to the well known two sector endogenous growth model used by rebelo 1991 and king and rebelo 1990 with endogenous labor supply

output growth the real wage and employment fluctuations this paper is an attempt to contribute to the integration of business cycle analysis with long term growth a real business cycle model with endogenous growth is developed and estimated with u s data in the present framework wage movements do not have to be transitory to generate fluctuations in labor effort the reduced form is a constrained bivariate output hours or real wage hours vector autoregressive process the bivariate setup provides a useful framework for analyzing the persistence of output fluctuations given that the theory implies that hours of work contain information about future output movement copyright 1991 by american economic association

government bias in education schooling attainment and long run growth a surprising cross country stylized fact is that higher public spending on education tends to lower the long run growth rate of per capita gdp and the returns to schooling this is contrary to the conventional wisdom that education is a major driver of growth in this article we revisit this issue and try to understand these puzzling facts in terms of an endogenous growth model our cross country calibration of the growth model predicts that countries with a greater government involvement in education experience lower schooling efforts and lower growth

anticipated monetary policy in a cash in advance economy this paper analyses the effects of perfectly foreseen monetary policy within the framework of a standard cash in advance economy anticipated monetary policy is shown to have real effects by influencing inflationary expectations in a cash in advance economy an increase in the anticipated rate of inflation reduces the return to labour supply and induces a substitution away from time spent in the labour market the paper analyses the implication of this substitution for the time paths of output prices interest rates real and nominal and stock market prices

a further exploration in the theory of exchange rate regimes in an interesting paper in this journal elhanan helpman 1981 develops a simple two country model to compare the welfare levels that are achieved under different exchange rate regimes in a world characterized by perfect foresight his basic finding is that equilibrium consumption allocations and hence welfare levels are identical under a floating exchange rate system and a one sided peg fixed exchange rate regime this result is due to helpman s assumption that output is determined exogenously which allows a separation of the real and monetary sides of the economy the purpose of this paper is to extend helpman s model by making two alterations in his setup 1 to allow production to be endogenously determined as a function of labor force participation and 2 to allow welfare levels to be dependent on labor service as well as on consumption the main conclusion then obtained is that a country may achieve a higher welfare level under a flexible exchange rate regime than under a fixed exchange rate regime since it is able to choose an optimal rate of inflation or currency depreciation

money output and inflation in the longer term major industrial countries 1880 2001 i introduction the empirical role of money growth in the macroeconomy has been studied by many researchers using different data and methods the most prominent studies focusing on the quantity theory of money are those of friedman and schwartz 1963 1982 using data averaged over the phases of the business cycle in order to capture longer run movements with u s and u k data back to 1867 the study by mccandless and weber 2001 is a representative example for a different approach for 110 countries in the post wwii period longer run growth rates are approximated by growth of a variable over a 30 year period average growth rates 1 the problem with phase averaging is that it does not deal with possible nonstationarity of the data 2 the problem with growth averages over long periods while informative to a degree is that they have limitations too it is impossible to assess the timing of movements in these variables 3 in the frequency domain the long run is associated with frequency zero which in our terminology is the long run trend previous studies in the frequency domain on the long run neutrality of money at zero frequency include the studies of lucas 1980 and geweke 1986 the theory of spectral analysis provides a rigorous framework for extracting specific frequency bands from the data instead of considering only frequency zero stock and watson 1998 applied the band pass filter of baxter and king 1999 to extract cycles frequency bands for u s data and focused on the business cycle and on mostly the post wwii period christiano and fitzgerald 2003 proposed an improved band pass filter and provided an application to the longer run relation of money and inflation for bands of 8 20 years and 20 40 years in the united states from 1900 to 1997 4 the usefulness of monetary aggregates for conducting monetary policy has been seriously called into question because of the instability of money demand a prominent empirical study is that of estrella and mishkin 1997 recent mainstream new keynesian models have no explicit role for money woodford 2008 a contrasting view is that the longer term role of money is still of relevance for monetary policy the european central bank explicitly emphasizes a supporting role that monetary aggregates should play in order to provide an anchor for inflation expectations hafer haslag and jones 2007 issing 2006 king 2002 nelson 2003 christiano motto and rostagno 2007 provided a theoretical new keynesian model where inflation expectations lose their anchor unless money is monitored and reacted to also beck and wieland 2008 presented a new keynesian model where cross checking with money growth movements improves inflation control similarly assenmacher wesche and gerlach 2006 2007 found a significant role for a low frequency low pass filtered component of money in the empirical new keynesian phillips curve equation 5 in the spirit of friedman 1961 we use long time spans so that our results are unlikely to be because of a specific policy rule in place in a given period we have 122 years of annual data from 1880 to 2001 before the introduction of the euro in 2002 we have real gross domestic product gdp money and consumer price indices cpis with no gaps for 11 industrialized countries 6 the countries included in our study differ in such terms as their institutions fiscal and monetary policies and economic growth rates nonetheless at least in peace time they were similar in generally having comparatively free markets in which prices and interest rates were determined our aim is to apply analytic methods that are free from economic and statistical models as much as possible in order to explore empirical regularities or stylized facts in the data also the focus of our research is the longer run we employ band pass filters to pick out cycles from each time series that last 8 40 years that is the longer term component

the impact of environmental management on firm performance environmental management has the potential to play a pivotal role in the financial performance of the firm many individuals suggest that profitability is hurt by the higher production costs of environmental management initiatives while others cite anecdotal evidence of increased profitability a theoretical model is proposed that links strong environmental management to improved perceived future financial performance as measured by stock market performance the linkage to firm performance is tested empirically using financial event methodology and archival data of firm level environmental and financial performance significant positive returns were measured for strong environmental management as indicated by environmental performance awards and significant negative returns were measured for weak environmental management as indicated by environmental crises the implicit financial market valuation of these events also was estimated cross sectional analysis of the environmental award events revealed differences for first time awards and between industries first time award announcements were associated with greater increases in market valuation although smaller increases were observed for firms in environmentally dirty industries possibly indicative of market skepticism this linkage between environmental management and financial performance can be used by both researchers and practitioners as one measure of the benefits experienced by industry leaders and as one criterion against which to measure investment alternatives

contrasting models of the effect of inflation on growth the paper formulates a nesting model for studying the theoretical literature on inflation and endogenous growth it analyses different classes of endogenous growth models with different usage of physical and human capital with different exchange technologies first the paper shows that a broad array of models can all generate significant negative effects of inflation on growth second it shows that these models can be differentiated primarily by the fact whether there is a tobin type effect of inflation and also whether the inflation growth effect becomes weaker as the inflation rate rises a non linearity or stays essentially constant over the range of inflation rates the paper compares these features of the models to empirical evidence as a way to summarize the efficacy of the models

devaluation levels vs rates and balance of payments in a cash in advance economy abstract this paper investigates the consequences of the currency devaluation both in levels and rates on the balance of payments in a cash in advance economy with finite horizons endogenous capital accumulation and international capital immobility in this context a once and for all currency devaluation induces a balance of payments surplus whereas a sustained increase in the rate of devaluation produces in principle an ambiguous effect on the balance of payments if however non restrictive assumptions on some structural parameters are made an increase in the devaluation rate leads to a balance of payments surplus the exact opposite of calvo s result j int econ 11 2 1981 165

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

the welfare cost of inflation under imperfect insurance abstract this paper examines the welfare cost of inflation in an economy where agents hold money in order to smooth consumption in the face of income variability for which there is no insurance the findings indicate that for the type of economies considered here the area under the empirical money demand curve is a poor measure of the welfare cost of inflation this area accounts for only one fourth of the true costs in the case of 5 inflation

inflation human capital and tobin s q a pervasive empirical finding for the us economy is that inflation is negatively correlated with the normalized market price of capital tobin s q and growth a dynamic stochastic general equilibrium model of endogenous growth is developed to explain these stylized facts in this model human capital is the principal driver of self sustained growth long run comparative statics analysis suggests that inflation diverts scarce time resource to leisure which lowers human capital utilization this impacts growth adversely and modulates capital adjustment cost downward resulting in a decline in tobin s q for the short run a tobin effect of inflation on growth weakens the negative association between inflation and q

inflation investment and growth a money and banking approach output growth investment and the real interest rate in long run evidence tend to be negatively affected by inflation theoretically inflation acts as a human capital tax that decreases output growth and the real interest rate but increases the investment rate opposing evidence this paper resolves this puzzle by requiring exchange for investment as well as consumption inflation then decreases the investment rate and still decreases both output growth and real interest up to some moderately high rate of inflation above which increasingly low investment finally causes capital to fall relative to labour and the real interest rate to rise

money and growth revisited abstract conventional wisdom is that if public policy can affect the growth rate of the economy the welfare implications of alternative policies will be large in this paper a stochastic dynamic general equilibrium model with endogenous growth and money is examined in this setting inflation lowers growth through its effect on the return to work however the welfare costs of higher inflation are modest the endogenous labor supply is important in producing this result

should i stay or should i go an econometric analysis of retirement decisions by couples abstractthis article analyses retirement decisions from a household perspective treating the retirement timing of spouses as potentially interdependent choices to identify the determinants of ret

a unified framework for monetary theory and policy analysis search theoretic models of monetary exchange are based on explicit descriptions of the frictions that make money essential however tractable versions of these models typically make strong assumptions that render them ill suited for monetary policy analysis we propose a new framework based on explicit micro foundations within which macro policy can be studied the framework is analytically tractable and easily quantifiable we calibrate the model to standard observations and use it to measure the cost of inflation we find that going from 10 percent to 0 percent inflation is worth between 3 and 5 percent of consumption much higher than previous estimates

real effects of money growth and optimal rate of inflation in a cash in advance economy with labor market frictions this paper studies the consequences of labor market frictions for the real effects of steady inflation when cash is required for households consumption purchases and firms wage payments money growth may generate a positive real effect by encouraging vacancy creation and raising job matches this may result in a positive optimal rate of inflation particularly in an economy with moderate money injections to firms and with nonnegligible labor market frictions in which wage bargains are not efficient this main finding holds for a wide range of money injection schemes with alternative cash constraints and in a second best world with pre existing distortionary taxes

a comparative analysis of greening policies across supply chain structures abstract in this paper we examine an apparel serial supply chain whose players initiate product greening we consider situations in which the players cooperate or act individually our problem is motivated by recent developments in the supply chains of global apparel players we build game theoretic models and show how greening levels prices and profits are influenced by channel structures we also study the impact of greening costs and consumer sensitivity towards green apparels we propose a two part tariff contract to coordinate the green channel our key contribution lies in the model of decision making of various supply chain structures and analyzing its impact on the players and supply chain the problem throws interesting insights into the strategies of apparel players and their key decisions

motives and performance outcomes of sustainable supply chain management practices a multi theoretical perspective many researchers believe the tremendous industrial development over the past two centuries is unsustainable because it has led to unintended ecological deterioration despite the ever growing attention sustainable supply chain management sscm has received most sscm research and models look at the consequences rather than the antecedents or motives of such responsible practices the few studies that explore corporate motives have remained largely qualitative and large scale empirical analyses are scarce drawing on multiple theories and combining supply chain and business ethics literature we purport that instrumental relational and moral motives are behind a firm s engagement in sscm practices specifically we examine the links between corporate motives sscm practices and firm performance using a sample of 259 supply chain firms in germany we empirically test five hypothesized relationships our results reveal that relational and moral motives are key drivers and that firms exhibiting high levels of moral obligations tend to outperform those primarily driven by amoral considerations findings of this study contribute to multiple literatures espousing sustainability management and can help policy makers stakeholder groups and scholars develop more robust strategies for encouraging firms to practice sscm

inflation and balanced path growth with alternative payment mechanisms the paper shows that contrary to conventional wisdom an endogenous growth economy with human capital and alternative payment mechanisms can robustly explain major facets of the long run inflation experience a negative inflation growth relation is explained including a striking nonlinearity found re peatedly in empirical studies a set of tobin 1965 effects are also explained and further linked in magnitude to the growth effects through the interest elasticity of money demand undis closed previously this link helps fill out the intuition of how the inflation experience can be plausibly explained in a robust fashion with a model extended to include credit as a payment mechanism

a simple time series test of endogenous vs exogenous growth models an application to the united states this paper presents evidence supporting endogenous growth models that emphasize public structural capital the authors apply a simple test of endogenous vs exogenous growth models in exogenous growth economies temporary innovations to policy variables lead only to temporary changes in gnp levels while in endogenous growth economies the innovations can lead to permanent changes in gnp levels of the seven u s policy variables they examine only non military equipment capital and non military structural capital have a statistically and economically significant effect upon long run gnp levels further estimation suggests that the non military equipment capital result is not robust and that several disaggregate components of structural capital contribute significantly copyright 1996 by mit press

financial shocks and the us business cycle employing the financial accelerator fa model of bernanke gertler and gilchrist 1999 enhanced to include a shock to the fa mechanism we construct and study shocks to the efficiency of the financial sector in post war us business cycles we find that financial shocks are very tightly linked with the onset of recessions more so than tfp or monetary shocks the financial shock invariably remains contractionary for sometime after recessions have ended the shock accounts for a large part of the variance of gdp and is strongly negatively correlated with the external finance premium second moments comparisons across variants of the model with and without a stochastic fa mechanism suggests the stochastic fa model helps us understand the data

measuring the contribution of durable goods to the welfare cost of inflation in this paper we measure the contribution of durable goods to the welfare cost of inflation in the context of an endogenous growth model with durable and nondurable goods where purchases of the latter require only a partial cash payment compared with the former unlike existing measures our proposed welfare measure is computationally efficient and relatively easy to implement we find that durability adds a significant component to the welfare costs of inflation

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

on the real effects of inflation and inflation uncertainty in mexico we estimate an augmented multivariate garch m model of inflation and output growth for mexico at business cycle frequencies the main findings are 1 inflation uncertainty has a negative and significant effect on growth 2 once the effect of inflation uncertainty is accounted for lagged inflation does not have a direct negative effect on output growth 3 however as predicted by friedman and ball higher average inflation raises inflation uncertainty and the overall net effect of average inflation on output growth in mexico is negative that is average inflation is harmful to mexican growth due to its impact on inflation uncertainty 4 the mexican presidential election cycle significantly raises inflation uncertainty both during the year of the election and the year following the election which has correspondingly negative effects on output growth

dynamic laffer curves abstract in an endogenous growth model with human capital accumulation we discuss the possibility of welfare improving changes on the fiscal policy stance in some actual economies first we characterize the extent to which the initial fall in revenues produced by a permanent tax cut can be compensated by an increase in the tax base due to a dynamic laffer curve effect showing that there is in fact a non trivial margin for substituting debt for taxes on labor and capital income second we show that the largest feasible reduction in labor income tax rates may easily produce a higher welfare gain than the largest feasible reduction in capital income tax rates two qualifications a feasible tax cuts exist only for a relatively high elasticity of intertemporal substitution of consumption and b the preference for the largest feasible tax cut on labor income rather than that on capital income reverses for a low appreciation for leisure relative to consumption in the preferences of the representative agent