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Title: Money as a medium of exchange and monetary growth in an underdevelopment context
Authors: Kapur, B.K. 
Issue Date: Mar-1975
Citation: Kapur, B.K. (1975-03). Money as a medium of exchange and monetary growth in an underdevelopment context. Journal of Development Economics 2 (1) : 33-48. ScholarBank@NUS Repository.
Abstract: This paper constructs a neoclassical monetary growth model applicable to less developed economies, in that (1) the economy is assumed to be labour-surplus (as a result of which its steady-state growth rate is an endogenous variable), and (2) differential savings propensities on the part of profit- and wage-earners are postulated. The model predicts that an increase in the rate of monetary expansion increases the steady-state rate of inflation, increases the capital-labour ratio, reduces the money-labour ratio, and reduces the steady-state growth rate. Because of this last-mentioned fact, an inflationary policy is held to be unfavorable to economic development, despite the fact that it increases the capital-labour ratio. Some implications of the analysis for the well-known 'choice of techniques' problem are also discussed. © 1975.
Source Title: Journal of Development Economics
ISSN: 03043878
Appears in Collections:Staff Publications

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