INFLATION AND GROWTH WITH THE MIU APPROACH AND THE EQUATION OF EXCHANGE
INFLATION AND GROWTH WITH THE MIU APPROACH AND THE EQUATION OF EXCHANGE
Author(s): Wei-Bin ZhangSubject(s): Supranational / Global Economy, International relations/trade, Political economy, Economic development, Financial Markets
Published by: Editura Sitech
Keywords: inflation; Tobin growth model; equation of exchange; Baumol-Tobin model; MIU approach;
Summary/Abstract: The purpose of this paper is to study a relationship between growth and inflation on the basis of the Tobin growth model. We deviate from the Tobin approach by determining money demand with the money-in-utility (MIU) approach. The utility is affected by money holding. The utility function is applied by an alternative approach proposed by Zhang. The wealth accumulation a key determinant of economic growth. The government supplies money which is described by the traditional equation of exchange. The velocity of money is determined as a function of the rate of interest as in the Baumol-Tobin model. We build the dynamic model and simulate the motion of the model. We carry out comparative dynamic analysis in various parameters.
Journal: Social Sciences and Education Research Review
- Issue Year: 7/2020
- Issue No: 1
- Page Range: 45-71
- Page Count: 27
- Language: English