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Title: Inflation, Complexity and Endogenous Growth
Authors: Sequeira, Tiago Neves 
Gil, Pedro Mazeda 
Afonso, Óscar
Keywords: inflation, endogenous economic growth, complexity effects, entropy.
Issue Date: 23-Sep-2019
Series/Report no.: CeBer Working Paper 2019-04;
Abstract: In this article, we argue that inflation increases complexity pertaining to knowledge production (or R&D). Then, we expand a recently developed complexity index based on entropy to include the effect of inflation. As a result of this new mechanism in an endogenous growth model, inflation is no longer superneutral. In the model, inflation can decrease economic growth in a nonlinear way, a sudden upward shock on inflation can severely hurt economic growth and an inflation cut can be responsible for a take-off. These effects are illustrated quantitatively.
Rights: openAccess
Appears in Collections:I&D CeBER - Working Papers

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