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a Prof. Wei-Bin Zhang
INFLATION POLICY, EDUCATION AND HOME PRODUCTION :
In a Monetary Growth Model
ABSTRACT
This study builds a monetary growth model with home production and endogenous labor supply. The model synthesizes the main ideas in the neoclassical growth theory and the cash-in-advance (CIA) approach in monetary theory in a compact framework. We show that the dynamics of the economy can be described by - dimensional differential equations. We simulate equilibrium and motion of the economy with specified monetary policies, preference for education, efficiency of applying human capital and technology. As the monetary economic system is has a unique saddle point, the economy may either experience unlimited growth or economic crisis. We also study effects of changes in some parameters on the economic equilibrium.
Keywords: Education, human capital, physical capital, money, inflation policy, CIA approach
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