This paper presents a simple model with financial frictions where inflation increases the cost faced by firms holding liquid assets to hedge risky production against expenditure shocks. Inflation tilts firms' technology choice away from innovative activities and toward safer but return-dominated ones, and therefore reduces long-run growth. The theory makes specific predictions about how the severity of this adverse effect depends on industry characteristics...
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详细
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2018/05/10
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政策研究报告
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WPS8436
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1
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1
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2018/05/10
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Disclosed
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Inflation, liquidity and innovation
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retained earnings