Real effects of money and welfare costs of inflation in an endogenously growing economy with transactions costs

Economic development ; Inflation (Finance) ; Money

Government financing in an endogenous growth model with financial market restrictions

In this paper we develop an endogenous growth model with market regulations on explicitly modeled financial intermediaries to examine the effects of alternative government financing schemes on growth, inflation, and welfare. ; We find that in the presence of binding legal reserve requirements, a marginal increase in government spending need not result in a reduction in the rate of economic growth if it is financed with an increase in the seigniorage tax rate. Raising the seigniorage tax base by means of an increase in the reserve requirement retards growth and has an ambiguous effect on inflation. An increase in income tax—financed government spending also suppresses growth and raises inflation although not to the extent that the required seigniorage tax rate alternative would. Switching from seigniorage to income taxation as a source of government finance is growth-reducing but deflationary. From a welfare perspective, the least distortionary way of financing an increase in the government spending requirements is by means of a marginal increase in the seigniorage tax rate. Finally, under the specification of logarithmic preferences, the optimal tax structure is indeterminate.Finance, Public ; Fiscal policy ; Financial markets

A general two-sector model of endogenous growth with human and physical capital: balanced growth and transitional dynamics

Economic development ; Human capital

A general two sector model of endogenous growth with human and physical capital

Human capital

On government credit programs

Credit rationing is a common feature of most developing economies. In response to it, the governments of these countries often operate extensive credit programs and lend, either directly or indirectly, to the private sector. We analyze the macroeconomic consequences of a typical government credit program in a small open economy. We show that such programs increase long-run production if the economy is in a development trap and that such programs often lead to endogenously arising aggregate volatility. On the other hand, they may eliminate certain indeterminacies created by endogenous credit market frictions.Banks and banking, Central ; Credit ; Productivity

Barriers to international capital flows: when, why, how big, and for whom?

Until recently, the trend in world capital markets has been toward increasing “globalization.” Recent events in Latin America and Asia have forced a rethinking of the desirability of unrestricted world capital flows. In this paper we ask whether simple restrictions on capital mobility can succeed in reducing the volatility of funds flows, whether such restrictions are consistent with the long-term development of the countries that might impose them, whether such restrictions are beneficial for poorer countries while harming wealthier countries, and whether barriers to capital movements should be reduced in magnitude as the development process proceeds. ; We find first that appropriately selected barriers to capital movements can be used by a poorer country to eliminate the short-term volatility of capital flows and other economic volatility as well. Second, we find that these barriers are consistent with increased rather than reduced levels of economic development in both the short and long run. Third, we show that it is empirically plausible that such barriers will be reduced over time as economies develop. Fourth, we show that, in the long run, all countries can benefit from the presence of barriers to capital mobility. And, fifth, we show that barriers to capital mobility can increase the magnitude of net capital flows in a steady state.International economic relations ; International finance ; Capital movements ; Monetary policy

An endogenous growth model of money, banking, and financial repression

In this paper, we develop an endogenous growth model with financial intermediation to examine the effects of financial repression on growth, inflation, and welfare. By limiting the liquidity provision, binding reserve requirements always suppress economic growth while their effect on inflation is a function, among other things, of the degree of repression. For example, contrary to previous claims, if financial repression is severe enough so that an informal financial sector emerges, liberalization is inflationary. Notwithstanding, liberalization in these cases is always welfare improving. Finally, we characterize the condition that gives rise to a unique optimal level of binding reserve requirements, i.e., the optimal degree of "moderate" financial repression.Financial markets ; Money theory

Fiscal and monetary policy interactions in an endogenous growth model with financial intermediaries

We review some inflationary and growth claims surrounding fiscal and monetary policy interactions. While financial intermediation has long been acknowledged as a key mechanism in the transmission of these interactions, only recently have economists incorporated the explicit modeling of such intermediaries in their analyses. Here we model financial intermediaries explicitly. We find that the relation between growth and inflation depends crucially on the agents' degree of relative risk aversion. Moreover, the degree of relative risk aversion also plays a significant role in the existence and uniqueness of the balanced growth equilibrium. ; Another important contribution of the current paper is its investigation into the effects of different government financing methods on economic growth and welfare.Fiscal policy ; Monetary policy

Infant feeding practices in a multi-ethnic Asian cohort: the GUSTO study

The optimal introduction of complementary foods provides infants with nutritionally balanced diets and establishes healthy eating habits. The documentation of infant feeding practices in multi-ethnic Asian populations is limited. In a Singapore cohort study (GUSTO), 842 mother-infant dyads were interviewed regarding their feeding practices when the infants were aged 9 and 12 months. In the first year, 20.5% of infants were given dietary supplements, while 5.7% took probiotics and 15.7% homeopathic preparations. At age 9 months, 45.8% of infants had seasonings added to their foods, increasing to 56.3% at 12 months. At age 12 months, 32.7% of infants were given blended food, although 92.3% had begun some form of self-feeding. Additionally, 87.4% of infants were fed milk via a bottle, while a third of them had food items added into their bottles. At both time points, more than a third of infants were provided sweetened drinks via the bottle. Infants of Indian ethnicity were more likely to be given dietary supplements, have oil and seasonings added to their foods and consumed sweetened drinks from the bottle (p < 0.001). These findings provide a better understanding of variations in infant feeding practices, so that healthcare professionals can offer more targeted and culturally-appropriate advice

Three closely related (2E,200E)-3,300-(1,4-phenylene)- bis[1-(methoxyphenyl)prop-2-en-1-ones]: supramolecular assemblies in one dimension mediated by hydrogen bonding and C—Hp interactions

In the title compounds, (2E,20E)-3,30-(1,4-phenylene)bis[1-(2-methoxyphenyl)- prop-2-en-1-one], C26H22O4 (I), (2E,20E)-3,30-(1,4-phenylene)bis[1-(3-methoxyphenyl) prop-2-en-1-one], C26H22O4 (II) and (2E,20E)-3,30-(1,4-phenylene)bis[1- (3,4-dimethoxyphenyl)prop-2-en-1-one], C28H26O6 (III), the asymmetric unit consists of a half-molecule, completed by crystallographic inversion symmetry. The dihedral angles between the central and terminal benzene rings are 56.98 (8), 7.74 (7) and 7.73 (7) for (I), (II) and (III), respectively. In the crystal of (I), molecules are linked by pairs of C—H interactions into chains running parallel to [101]. The packing for (II) and (III), features inversion dimers linked by pairs of C—HO hydrogen bonds, forming R2 2(16) and R2 2(14) ring motifs, respectively, as parts of [201] and [101] chains, respectively