TITLE:
R & D-Based Growth Model with Nominal Wage Stickiness
AUTHORS:
Shunsuke Shinagawa, Tomohiro Inoue
KEYWORDS:
Endogenous Growth, New Keynesian Phillips Curve, Nominal Rigidities, Monetary Growth Theory
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.5,
September
7,
2016
ABSTRACT: In this study, we introduce nominal wage stickiness
into an endogenous growth model based on R & D. This study examines how
money growth affects long-run economic growth. We find that there exists a
unique balanced growth path for sufficiently high rates of money growth, and
that the economy exhibits sustained growth based on sustained R & D. Faster
money growth results in greater employment and faster economic growth along
such a balanced growth path. Furthermore, under some parameter restrictions, no
balanced growth path exists for low rates of money growth; the economy is trapped in a steady state without long-run
growth. These results suggest that
money growth may be an important factor for long-run economic growth.