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This paper focuses on a monetary explanation of two business cycle regularities: (i) business and household investment … are positively correlated and procyclical and (ii) business investment tends to lag household investment over the cycle … bearing deposits to households and loanable funds to finance business investment. It is shown that the adaptation of …
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To examine the effect of monetary policy on economic growth, we formulate an endogenous growth model with cash-in-advance constraints on R&D and capital accumulation as endogenous growth engines. Within this framework, we show that the relationship between economic growth and the nominal...
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