Fujisaki, Seiya and Mino, Kazuo (2009): Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation.
Download (162kB) | Preview
This paper examines the long-run impact of inflation tax in the context of a generalized Ak growth model in which the rate of capital depreciation is endogenously determined. It is assumed that the rate of capital depreciation positively depends on capital utilization rate and negatively depends on maintenance spending. Money is introduced via a cash in advance constraint that may apply to the maintenance expenditure as well as to consumption and investment spending. We find that the long-run effects of inflation tax are more complex than those obtained in the monetary Ak growth model with a fixed capital depreciation rate. In particular, the relation between inflation and growth is highly sensitive to the specifications of the capital depreciation technology as well as to the forms of cash-in-advance constraint.
|Item Type:||MPRA Paper|
|Original Title:||Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation|
|Keywords:||cash-in-advance constraint, AK growth model, endogenous capital depreciation, maintenance expenditures|
|Subjects:||E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity|
|Depositing User:||Kazuo Mino|
|Date Deposited:||10. Aug 2009 09:31|
|Last Modified:||11. Feb 2013 10:45|
Aznar-Màrquez, J. and Ruiz-Tamarit, R. (2004), "Endogenous Growth, Capital Utilization and Depreciation", FEDRA Discussion Paper No.24.
Chen, S-H., and Guo, J-T. (2008a), "Velocity of Money, Equilibrium (In) determinacy and Endogenous Growth", Journal of Macroeconomics 30, 1085-1096.
Chen, S-H., and Guo, J-T. (2008b), "On the Growth and Velocity Effects of Money", Economics Bulletin 5, Issue 13, 1-7.
Fujisaki, S. and Mino, K. (2007), "Generalized Taylor Rule and Determinacy of Growth Equilibrium", Economics Bulletin 11, Issue 5, 1-7.
Fujisaki, S. and Mino, K. (2009), "Long-Run Impacts of Inflation Tax in the Presence of Multiple Capital Goods", Economics Bulletin 29, Issue 3, 1649-1657.
Guo, J-T. and Lansing, K. (2007), "Maintenance Expenditures and Indeterminacy under Increasing Returns to Scale", International Journal of Economic Theory 3, 147-158.
Itaya, J. and Mino, K. (2007), "Technology, Preferences and the Growth Effect of Money Supply", Macroeconomic Dynamics 11, 589-612.
Jha, S., Yip, C. and Wang, P. (2002), "Dynamics in a Transactions-Based Monetary Growth Model," Journal of Economic Dynamics and Control 26, 611-635.
Licandro, O. and L. A. Puch (2000), "Capital Utilization, Maintenance Costs and the Business Cycle," Annales d'Economie et de Statistique 58, 143-164.
Licandro, O., Puch, L.A. amd Ruiz-Tamarit, R. (2001), "Optimal Growth under Endogenous Depreciation, Capital Utilization and Maintenance Costs", Investigaciones Economicas 25, 543-559.
Li, K.F. and Yip, C-K., (2004), "Monetary Policy and Equilibrium Indeterminacy in a Cash-in-Advance Economy with Investment", Economics Bulletin 5, 2, 1-7.
McGrattan, E. and Schmitz, J.A. (1999), "Maintenance and Repair: Too Big to Ignore," Quarterly Review of the Federal Reserve Bank of Minneapolis 23, No. 4, 2-23.
Mullen, K.K. and Williamsb, M. (2004), "Maintenance and Repair Expenditures: Determinants and Trade-offs with New Capital Goods", Journal of Economics and Business 56, 483-499.
Suen, M-H. and Yip, C-K. (2005), "Superneutrality, Indeterminacy and Endogenous Growth", Journal of Macroeconomics 27, 579-595