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Endogenous Growth, Monetary Shocks and Nominal Rigidities

Annicchiarico, Barbara and Pelloni, Alessandra and Lorenza, Rossi (2010): Endogenous Growth, Monetary Shocks and Nominal Rigidities.

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Abstract

We introduce endogenous growth in an otherwise standard NK model with staggered prices and wages. Some results follow: (i) monetary volatility negatively affects long-run growth; (ii)the relation between nominal volatility and growth depends on the persistence of the nominal shocks and on the Taylor rule considered; (iii) a Taylor rule with smoothing increases the negative effect of nominal volatility on mean growth.

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