Research ArticleOpen AccessGoogle Scholar indexed
Money and Economic Growth Revisited: A Note
Ryerson University, Toronto, Canada
York University, Toronto, Canada
- 1 Ryerson University, Toronto, Canada
- 2 York University, Toronto, Canada
Theoretical Economics Letters·Volume 12 (2022)·Pages 1–5·Published 5 January 2022·DOI10.4236/tel.2022.121001
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Abstract
In an important but neglected paper, Begg (1980) attempted to solve the puz-zle of monetary super-neutrality in the steady-state. Super-neutrality was shown to depend on two sufficient conditions, only one of which is necessary. Begg argued that a more general specification restores monetary non-super-neutrality. This note suggests an additional sufficient condition for super-neutrality. The demand for real balances must be modeled as a de-creasing function of the real interest rate. This has implications for models as-suming a steady-state. Harkness (1978) had already shown that the extra suf-ficient condition is a necessary condition for existence.
KeywordsMonetary Super-NeutralityMoney and GrowthRational ExpectationsReal Interest RateWealth Effect
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