Inflation, complexity and endogenous growth

• Type: Article in International Scientific Journal
• Date: 2021

Authors

Sequeira, TN (Author) Other; Pedro Rui Mazeda Gil (Author) FEP; Óscar Afonso (Author) FEP

Journal

Title: Applied Economics

Vol. 53 No. 23

Pages: 2631-2646

ISSN: 0003-6846

Publisher: Taylor & Francis

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 0 Citations

Other information

Authenticus ID: P-00T-BW6

DOI: 10.1080/00036846.2020.1864274

Abstract (EN): In this article, we argue that inflation increases complexity pertaining to knowledge production (or R&D). Then, we expand a recently developed complexity index based on entropy to include the effect of inflation. As a result of this new mechanism in an endogenous growth model, inflation is no longer superneutral. In the model, inflation can decrease economic growth in a non-linear way, a sudden upward shock on inflation can severely hurt economic growth and an inflation cut can be responsible for a take-off. These effects are illustrated quantitatively.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 16