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Download fileVolatile public spending in a model of money and sustainable growth
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posted on 2007-07-11, 12:38 authored by Dimitrios VarvarigosIn a model where seignorage provides the financing instrument for the government’s budget, public spending volatility has an adverse effect on long-run growth. This negative relationship arises because the incidence of volatility in this type of public policy is responsible for higher average money growth, thus induces individuals to devote less time/effort towards capital accumulation. Another implication of the model is that policy variability provides a possible argument behind the positive correlation between inflation and inflation variability.
History
School
- Business and Economics
Department
- Economics
Publication date
2007Notes
This is a working paper. It was also published at: http://ideas.repec.org/p/lbo/lbowps/2007_18.html.ISSN
1750-4171Language
- en