The required degree of increasing returns-to-scale to satisfy the Benhabib-Farmer condition for local indeterminacy is too high to be empirically plausible. In the paper, we develop a natural extension of Benhabib and Farmer's (1994, Journal of Economic Theory) model by introducing aggregation...

This paper sets up a monetary endogenous growth model, and uses it to explain the ambiguous linkage between the military burden and the inflation rate observed in existing empirical studies. It is found that an expansion in the military burden has an ambiguous effect on the inflation rate...