In this paper, we examine the impact of financial market development on capital accumulation and inflation. In particular, we explore this issue in a setting in which banks provide risk pooling services. Furthermore, money overcomes incomplete information to facilitate transactions between...

monstrate that in?ation adversely a¤ects capital formation through the crowding out e¤ect. Interestingly, the results are at odds with empirical evidence. In particular, recent studies point out to an asymmetric rela- tionship between in?ation and the real economy across countries. Speci?-...