Chu, Angus C. and Lai, Ching-Chong and Liao, Chih-Hsing (2010): A tale of two growth engines: Interactive effects of monetary policy and intellectual property rights.
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How do intellectual property rights that determine the market power of firms influence the growth and welfare effects of monetary policy? To analyze this question, we develop a monetary endogenous-growth model in which R&D and capital accumulation are both engines of long-run economic growth. We find that monetary expansion hurts economic growth and social welfare by reducing R&D and capital accumulation. Furthermore, a larger market power of firms strengthens these growth and welfare effects of monetary policy through the R&D channel but weakens these effects through the capital-accumulation channel. Therefore, whether the market power of firms amplifies or mitigates the welfare cost of inflation depends on the relative importance of the two growth engines. Finally, we calibrate the model using data in the United States and the Euro Area to quantitatively evaluate and compare the welfare cost of inflation in these two economies and find that the R&D channel dominates in both economies.
|Item Type:||MPRA Paper|
|Original Title:||A tale of two growth engines: Interactive effects of monetary policy and intellectual property rights|
|Keywords:||economic growth; inflation; monetary policy; patent policy; R&D|
|Subjects:||O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O30 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
|Depositing User:||Angus C. Chu|
|Date Deposited:||31. Jul 2012 13:47|
|Last Modified:||12. Feb 2013 19:17|
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A tale of two growth engines: The interactive effects of monetary policy and intellectual property rights. (deposited 07. Apr 2011 18:48)
- A tale of two growth engines: Interactive effects of monetary policy and intellectual property rights. (deposited 31. Jul 2012 13:47) [Currently Displayed]