Rising cost of living and you can Growth: A non-Monotonic Dating in a technologies-Inspired Discount

Rising cost of living and you can Growth: A non-Monotonic Dating in a technologies-Inspired Discount

That it paper discusses the consequences away from economic policy toward much time-manage economic gains thru various other dollars-in-progress restrictions towards the RD when you look at the a good Schumpeterian growth design having straight and you may lateral invention. The connection between inflation and you will increases is contingent into the cousin extents off CIA limits and diminishing yields so you’re able to two types of creativity. About empirically related situation where horizontal RD is suffering from deeper diminishing yields than just vertical RD, rising prices and you may development can be showcase an upside down-U relationships in the event the CIA constraint with the horizontal RD are good enough larger than one with the vertical RD. Eventually, the newest model was calibrated with the You discount, and we find that the organization-enhancing price out of rising prices is just about 2.8%, which is closely in line with previous empirical prices.

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