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:
CreatorsEmailORCIDORCID Put Code
Asfuroglu, DilaUNSPECIFIEDorcid.org/0000-0003-1650-6711UNSPECIFIED
Elgin, CeyhunUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
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:
KeywordsLanguage
MARKET; UNCERTAINTY; MONEY; MODEL; REALMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/25944

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