Dotsey, Michael; Sarte, Pierre-Daniel - Federal Reserve Bank of Richmond - 1997
This paper analyzes the effects of inflation variability on economic growth in a model where money is introduced via a … cash-in-advance constraint. In this setting, we find that inflation adversely affects long-run growth, even when the cash …-in-advance constraint applies only to consumption. At the same time, we find that inflation and growth are positively related in the short …