Inflationary financing of public investment and economic growth

Article Abstract:

The effect of inflationary financing of public investment on economic growth was investigated using a theoretical model in which government financed expenditures have a positive impact on productivity growth, allowing the distortionary effect of inflation tax to be compensated by the productive effect of public expenditures. Results showed that an equilibrium exists for some interval of money creation rates where money is valued and where steady state physical capital increases with inflation. It was also found that zero inflation and growth maximization are not optimal growth policies.

Administration of Urban Planning and Community and Rural Development, Economic Development NEC, Economic development, Public investments, Expenditures, Public, Public expenditures

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Policy bargains and the problem of model selection

Article Abstract:

Macroeconomic policy decisions are complicated by the dilemma of choosing the model specification which could best satisfy requirements necessary to realize intended results. The uncertainty surrounding variables should be clarified before decisions are made to ensure that they are relatively free of errors. Various policy bargain definitions and model choices result in a positive degree of robustness as measured against such variables as model uncertainty and model disagreements.

Research, Macroeconomics

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Inflation-stabilization risk in economies with incomplete asset markets

Article Abstract:

A general equilibrium mathematical model is proposed which demonstrates that the risk of an anticipated high level of inflation in tandem with a faint likelihood of a sudden price stabilization (or inflation-stabilization risk) erodes nominal financial markets out of existence and reduces welfare. Several imperfections in financial markets are imposed to demonstrate the socially costly consequences of inflation-stabilization risk.

Evaluation

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