In this study, we analyze the relationship between inflation and economic growth. To this end, we construct a model of … endogenous growth with creative destruction, incorporating sticky prices due to menu costs. Inflation and deflation reduce the … reward for innovation via menu cost payments and, thus, lower the frequency of creative destruction. Central banks can …

inflation on welfare, growth and the size of the financial sector. A novel feature is that the innovation sector is …Many countries simultaneously suffer from high inflation, low growth and poorly developed financial sectors. In this … contrast to previous work, reducing inflation generates large growth gains. These large gains cannot be easily reproduced by …