Universität zu Köln

Asfuroglu, Dila ORCID: 0000-0003-1650-6711 and Elgin, Ceyhun (2016). GROWTH EFFECTS OF INFLATION UNDER THE PRESENCE OF INFORMALITY. Bull Econ. Res., 68 (4). S. 311 - 329. HOBOKEN: WILEY. ISSN 1467-8586

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Abstract

In this paper we build an endogenous growth model in which the informal economy is subject to a cash-in-advance constraint along with physical capital accumulation and consumption. In this setting, we find that inflation generally adversely affects long-run growth. However; this effect strongly interacts with the size of the informal economy. Specifically, the negative effect becomes milder (and can even be positive) under the presence of a large informal economy. Moreover, using an annual cross-country panel data set of 161 countries over the period 1950-2010 we also provide some empirical support for the mechanism of our theory.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Asfuroglu, Dila UNSPECIFIED orcid.org/0000-0003-1650-6711 UNSPECIFIED Elgin, Ceyhun UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-259442
DOI:	10.1111/boer.12057
Journal or Publication Title:	Bull Econ. Res.
Volume:	68
Number:	4
Page Range:	S. 311 - 329
Date:	2016
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1467-8586
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language MARKET; UNCERTAINTY; MONEY; MODEL; REAL Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/25944