FEEM working papers "Note di lavoro" series
1999 .026

Money, Endogenous Fertility and Economic Growth

Authors: Alberto Petrucci
Series: Economy and Society
Editor: Gianmarco I.P. Ottaviano
Type: Journal
Keywords: Money superneutrality,Fertility,Capital accumulati
JEL n.: O42,O11,J13
JEL: Journal of Macroeconomics
Pages: 4
Date: 2003


This paper analyses the issue of money superneutrality through an intertemporal optimising model of capital accumulation and inflation with endogenous fertility, i.e. endogenous population growth. The model establishes an inverse relation between capital-labour ratio and population growth, which represents the crucial element for having non-superneutrality of money. A higher monetary growth rate increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, per capita output and consumption. The reverse Tobin effect on capital-labour ratio and per capita output is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule, which is a distorted Friedman rule, can call for either a contraction or an expansion of the money supply.

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