On the Effect of Monetary Stabilisation Policy on Long-run Growth
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AbstractThis paper presents a stochastic monetary growth model with nominal rigidities and active monetary policy in which technological change contains both deliberate (internal) and serendipitous (external) learning mechanisms. The model is used to describe how the implications of monetary stabilization policy for the long-run economic performance could change due to the ambiguity on the relationship between secular growth and cyclical volatility. JEL classification: E32, E52, O42 1.