Inflation and human capital formation: theory and panel data evidence

Existing monetary growth theories predict either negative or neutral effects from inflation on human capital. In this paper we develop a simple alternative model, which can generate positive effects. Our empirical analysis for 93 countries in 1975-1995 tends to confirm these positive effects. Using recent GMM panel data procedures, we find that rising inflation basically stimulates human capital. A robust negative effect can be observed only at extremely high inflation rates. A representative threshold may be 100%. For inflation rates below 15%, the effect of rising inflation seems insignificant. The latter result can also be rationalized from our model.

[1]  Olivier Thas,et al.  Correcting Standard Errors in Two-Stage Estimation Procedures with Generated Regressands , 2005 .

[2]  Katrien Stevens,et al.  Home Employment Effects of EU Firms’ Activities in Central and Eastern European Countries , 2005 .

[3]  Jan Annaert,et al.  The value of asset allocation advice: Evidence from The Economist's quarterly portfolio poll , 2005 .

[4]  Sabien Dobbelaere,et al.  Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing , 2005, SSRN Electronic Journal.

[5]  Tél,et al.  Faculteit Economie En Bedrijfskunde Hoveniersberg 24 B-9000 Gent Sovereign Credit Spreads and the Composition of the Government Budget , 2001 .

[6]  Erik Schokkaert,et al.  Responsibility sensitive egalitarianism and optimal linear income taxation , 2004, Math. Soc. Sci..

[7]  Dirk Van den Poel,et al.  Customer attrition analysis for financial services using proportional hazard models , 2004, Eur. J. Oper. Res..

[8]  Bart Baesens,et al.  Faculteit Economie En Bedrijfskunde Hoveniersberg 24 B-9000 Gent Bayesian Network Classifiers for Identifying the Slope of the Customer Lifecycle of Long-life Customers Bayesian Network Classifiers for Identifying the Slope of the Customer Lifecycle of Long-life Customers , 2022 .

[9]  Gert Peersman,et al.  The Transmission of Monetary Policy in the Euro Area: Are the Effects Different Across Countries? , 2004 .

[10]  Paul Gemmel,et al.  Service Level Agreements: een literatuuroverzicht , 2004 .

[11]  B. Clarysse,et al.  A process study of entrepreneurial team formation: the case of a research-based spin-off , 2004 .

[12]  Rudi Vander Vennet,et al.  Determinants of Mutual Fund Performance : A Bayesian Stochastic Frontier Approach 1 , 2001 .

[13]  L. Pozzi,et al.  The coefficient of relative risk aversion: a Monte Carlo study investigating small sample estimator problems , 2003 .

[14]  Erik Schokkaert,et al.  Best affine unbiased response decomposition , 2003 .

[15]  Gerdie Everaert,et al.  Balanced growth and public capital: an empirical analysis with I(2)-trends in capital stock data. , 2003 .

[16]  Sarah Steenhaut,et al.  The Relationship between Consumers' Unethical Behavior and Customer Loyalty in a Retail Environment , 2003 .

[17]  Sophie Manigart,et al.  INITIAL RETURNS: UNDERPRICING OR OVERVALUATION ? EVIDENCE FROM EASDAQ AND EURONM , 2003 .

[18]  Johan Christiaens,et al.  Financial Accounting Reform in Flemish Universities: An Empirical Study of the Implementation , 2003 .

[19]  L. Pozzi,et al.  Imperfect information and the excess sensitivity of private consumption to government expenditures , 2003 .

[20]  L. Mauro,et al.  Long run growth and investment in education: Does unemployment matter? , 2003 .

[21]  Elsy Verhofstadt,et al.  The impact of education on job satisfaction in the first job , 2003 .

[22]  Bert Weijters,et al.  Vlerick Leuven Gent Working Paper Series 2003/04 Assessing the Impact of Offline Url Advertising Assessing the Impact of Offline Url Advertising , 2022 .

[23]  K. de Wulf,et al.  Does Attitudinal Commitment to Stores Always Lead to Behavioral Loyalty? The Moderating Effect of Age , 2003 .

[24]  Koen Schoors,et al.  The Fate of Russia's Former State Banks: Chronicle of a Restructuring Postponed and a Crisis Foretold , 2003 .

[25]  Sabien Dobbelaere,et al.  Ownership, firm size and rent sharing in a transition country , 2003 .

[26]  Rudi Vander Vennet,et al.  Cross-border mergers in European banking and bank efficiency 1 , 2002 .

[27]  Glenn Rayp,et al.  Are fair trade labels good business ? Ethics and coffee buying intentions , 2003 .

[28]  Sofie Balcaen,et al.  The Ooghe-Joos-De Vos failure prédiction models: a cross-industry validation , 2003 .

[29]  Sabien Dobbelaere,et al.  Insider power and wage determination in Bulgaria: an econometric investigation , 2002 .

[30]  Aimé Heene,et al.  The quest for strategic groups: overview, and suggestions for future research , 2003 .

[31]  Katrien Stevens,et al.  Wage and employment effects in the EU of international trade with the emerging economies , 2003 .

[32]  María Amparo Castelló Climent,et al.  Human Capital Inequality and Economic Growth: Some New Evidence , 2002 .

[33]  Mario Vanhoucke,et al.  Optimal due date assignment in project scheduling , 2002 .

[34]  Koen Schoors,et al.  Foreign direct investment spillovers within and between sectors: Evidence from Hungarian data , 2002 .

[35]  Maggie Geuens,et al.  Developing a Short Affect Intensity Scale , 2002, Psychological reports.

[36]  L. Pozzi,et al.  Government debt and the excess sensitivity of private consumption to current income: an empirical analysis for OECD countries , 2002 .

[37]  Geert Dhaene,et al.  Inter-Ethnic Trust and Reciprocity: Results of an Experiment with Small Business Entrepreneurs ∗ , 2002 .

[38]  Frank Smets,et al.  The Industry Effects of Monetary Policy in the Euro Area , 2002, SSRN Electronic Journal.

[39]  Jan Bouckaert,et al.  Bargaining in markets with simultaneous and sequential suppliers , 2002 .

[40]  Delphine François,et al.  A Shapley decomposition of carbon emissions without residuals , 2002 .

[41]  Erik Demeulemeester,et al.  Discrete time/cost trade-offs in project scheduling with time-switch constraints , 2002, J. Oper. Res. Soc..

[42]  Peter Vlerick,et al.  Patients' and personnel's perceptions of service quality and patient satisfaction in nuclear medicine , 2002, European Journal of Nuclear Medicine and Molecular Imaging.

[43]  Maggie Geuens,et al.  Media Context and Advertising Effectiveness: The Role of Context Appreciation and Context/Ad Similarity , 2002 .

[44]  F. Windmeijer,et al.  Finite Sample Inference for GMM Estimators in Linear Panel Data Models , 2002 .

[45]  Stephen Bond,et al.  Dynamic panel data models: a guide to micro data methods and practice , 2002 .

[46]  Maggie Geuens,et al.  Validity and Reliability of Scores on the Reduced Emotional Intensity Scale , 2002 .

[47]  Bart Baesens,et al.  Bayesian neural network learning for repeat purchase modelling in direct marketing , 2002, Eur. J. Oper. Res..

[48]  Yishay Yafeh,et al.  Sources of Funds and Investment Activities of Venture Capital Funds: Evidence from Germany, Israel, Japan and the UK , 2002 .

[49]  Wen‐ya Chang.  Examining the long-run effect of money on economic growth: an alternative view , 2002 .

[50]  Koen Schoors,et al.  Should the Central and Eastern European Accession Countries Adopt the EURO Before or After Accession? , 2002 .

[51]  S. Hart,et al.  The impact of new product launch strategies on competitive reaction in industrial markets , 2002 .

[52]  Koen Dewettinck,et al.  EMPLOYMENT IMPLICATIONS OF DOWNSIZING STRATEGIES AND REORIENTATION PRACTICES: AN EMPIRICAL EXPLORATION. , 2002 .

[53]  Jan Annaert,et al.  Value and Size Effects: Now You See it, Now You Don't , 2002 .

[54]  Rudi Vander Vennet,et al.  Cost and Profit Efficiency of Financial Conglomerates and Universal Banks in Europe , 2002 .

[55]  Marc Deloof,et al.  The Valuation of Ipos by Investment Banks and the Stock Market: Empirical Evidence , 2002 .

[56]  Tom Verbeke,et al.  Faculteit Economie En Bedrijfskunde Hoveniersberg 24 B-9000 Gent Environmental Quality and Economic Growth Chairman of the Centre for Environmental Economics and Management , 2002 .

[57]  Tom Verbeke,et al.  Environmental Policy, Policy Uncertainty and Relocation Decisions , 2002 .

[58]  Sabien Dobbelaere,et al.  Insider power and wage determination in Bulgaria , 2002 .

[59]  Koen Schoors,et al.  Financial regulation in Central Europe: the role of reserve requirements and capital rules , 2002 .

[60]  Max Gillman,et al.  Modelling the effect of inflation: growth, levels, and Tobin. , 2002 .

[61]  Patrick De Pelsmacker,et al.  The Role of Humor in the Persuasion of Individuals Varying in Need for Cognition , 2002 .

[62]  Dieter Verhaest,et al.  Overeducation in the Flemish youth labour market , 2002 .

[63]  H. Ooghe,et al.  ARE FAILURE PREDICTION MODELS TRANSFERABLE FROM ONE COUNTRY TO ANOTHER ? AN EMPIRICAL STUDY USING BELGIAN FINANCIAL STATEMENTS , 2003 .

[64]  Ignace De Beelde,et al.  The impact of accounting differences between France and Belgium , 2002 .

[65]  Ann Vereecke,et al.  Faculteit Economie En Bedrijfskunde Hoveniersberg 24 B-9000 Gent the Strategic Role of the Plant: Testing Ferdows' Model the Strategic Role of the Plant: Testing Ferdows' Model , 2022 .

[66]  Olive Sweetman,et al.  Consequences of Specification Error for Distributional Analysis with an Application to Intergenerational Mobility , 2001 .

[67]  Jan Camerlynck,et al.  Are Acquisitions Worthwhile? An Empirical Study of the Post Acquisition Performance of Privately Held Belgian Companies Involved in Take-Overs , 2001 .

[68]  Gerdie Everaert,et al.  Infrequent Large Shocks to Unemployment: New Evidence on Alternative Persistence Perspectives , 2001 .

[69]  N. Gobbin,et al.  Fiscal Adjustments and Their Effects During the Transition to the EMU , 2001 .

[70]  Erik Schokkaert,et al.  Three Meanings of Intergenerational Mobility , 2001 .

[71]  R. Vander Vennet,et al.  D/2001/7012/07 Efficiency Effects of Bank Mergers and Acquisitions in Europe , 2001 .

[72]  G. Odekerken-Schröder,et al.  Investments in Consumer Relationships: A Cross-Country and Cross-Industry Exploration , 2001 .

[73]  Marc Deloof,et al.  Belgian Intragroup Relations and the Determinants of Corporate Liquid Reserves , 2001 .

[74]  Pantelis Kalaitzidakis,et al.  Measures of Human Capital and Nonlinearities in Economic Growth , 2001 .

[75]  Ali Youssef,et al.  Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence , 2001 .

[76]  Johan A. K. Suykens,et al.  Knowledge discovery in a direct marketing case using least squares support vector machines , 2001, Int. J. Intell. Syst..

[77]  G. Glomm,et al.  Human capital accumulation and endogenous public expenditures , 2001 .

[78]  Iris Vermeir,et al.  An Empirical Investigation of the Relationships between Ethical Beliefs , Ethical Ideology , Political Preference and Need for Closure of Dutch-Speaking Consumers in Belgium , 2000 .

[79]  Koen Schoors,et al.  The credit squeeze during Russia's early transition: A bank‐based view , 2001 .

[80]  Ans De Vos,et al.  Perceptions of the value of the HR function , 2001 .

[81]  J. Temple.  Growth Effects of Education and Social Capital in the OECD Countries , 2001 .

[82]  Bart Baesens,et al.  Wrapped input selection using multilayer perceptrons for repeat-purchase modeling in direct marketing , 2001, Intell. Syst. Account. Finance Manag..

[83]  Á. D. L. Fuente,et al.  Schooling data, technological diffusion, and the neoclassical model , 2001 .

[84]  Johan Christiaens,et al.  Converging New Public Management Reforms and Diverging Accounting Practices in Flemish Local Governments , 2001 .

[85]  Koen N. Denecker,et al.  Value-at-risk prediction using context modeling , 2001 .

[86]  S. Scarpetta,et al.  Does Human Capital Matter for Growth in OECD Countries? Evidence from Pooled Mean-Group Estimates , 2001 .

[87]  Andrea Bassanini,et al.  Economic Growth: The Role of Policies and Institutions. Panel Data Evidence from OECD Countries , 2001 .

[88]  Faculteit Economie,et al.  Supply of Venture Capital by European Governments , 2001 .

[89]  Johan Christiaens,et al.  Innovations in governmental accounting systems: the concept of a 'Mega General Ledger' in Belgian provinces , 2001 .

[90]  L. Pozzi,et al.  Government debt, imperfect information and fiscal policy effects on private consumption: evidence for two high debt countries , 2001 .

[91]  F. Economie.  Inflation, human capital and long-run growth - an empirical analysis - * , 2001 .

[92]  Andrea Bassanini,et al.  Economic Growth: The Role of Policies and Institutions , 2001 .

[93]  J. Bouckaert,et al.  Recente inzichten in de industriële economie over de ontwikkelingen in de telecommunicatie , 2001 .

[94]  Dirk Buyens,et al.  WORKING PAPER BUILDING A CONCEPTUAL FRAMEWORK ON THE EXPLORATORY JOB SEARCH , 2001 .

[95]  Freddy Heylen,et al.  Faculteit Economie En Bedrijfskunde Hoveniersberg 24 B-9000 Gent Inflation, Human Capital and Long-run Growth -an Empirical Analysis -* , 2001 .

[96]  Peter Vlerick,et al.  The Effect of Mood on Self-Referencing in a Persuasion Context , 2001 .

[97]  Aimé Heene,et al.  A SYSTEMS VIEW ON WHAT MATTERS TO EXCEL , 2005 .

[98]  Katleen Baeyens,et al.  The survival of venture capital backed companies , 2002 .

[99]  Tél,et al.  Reversed Score and Likelihood Ratio Tests , 2022 .

[100]  J. Temple.  Inflation and Growth: Stories Short and Tall , 2000 .

[101]  Annouk Lievens,et al.  Communication flows in international product innovation teams , 2000 .

[102]  R. Barro,et al.  International Data on Educational Attainment Updates and Implications , 2000 .

[103]  Marno Verbeek,et al.  A Guide to Modern Econometrics , 2000 .

[104]  Katia Campo,et al.  Towards understanding consumer response to stock-outs , 2000 .

[105]  Jan Camerlynck,et al.  Pre-Acquisition Profile of Privately Held Companies Involved in Takeovers: An Empirical Study , 2000 .

[106]  R. Domènech,et al.  Instituto de Análisis Económico (CSIC) and , 2000 .

[107]  R. Capolupo.  Output Taxation, Human Capital and Growth , 2000 .

[108]  Gerdie Everaert,et al.  Public capital and labour market performance in Belgium , 2000 .

[109]  Á. D. L. Fuente,et al.  HUMAN CAPITAL IN GROWTH REGRESSIONS: HOW MUCH DIFFERENCE DOES DATA QUALITY MAKE? ECONOMICS DEPARTMENT WORKING PAPERS NO. 262 , 2000 .

[110]  HOW TO PROMOTE ECONOMIC GROWTH IN THE EURO AREA , 2000 .

[111]  Katia Campo,et al.  The impact of stock-outs on whether, how much and what to buy , 2000 .

[112]  Wim Meeusen,et al.  Social protection competition in the EMU , 2000 .

[113]  Kristof De Wulf,et al.  Why it takes two to build succesful buyer-seller relationships , 2000 .

[114]  Patricia Everaert,et al.  Cost targets and time pressure during new product development , 2000 .

[115]  Kristof De Wulf,et al.  The influence of seller relationship orientation and buyer relationship proneness on trust, commitment, and behavioral loyalty in a consumer environment , 2000 .

[116]  R. Vander Vennet,et al.  Exact Factor Pricing in a European Framework , 2000 .

[117]  Patricia Everaert,et al.  The Impact of Target Costing on Cost , Quality and Development Time of New Products : Conflicting Evidence from Lab Experiments , 2001 .

[118]  Marc Jegers,et al.  Trade Credit, Corporate Groups, and the Financing of Belgian Firms , 1999 .

[119]  Marc Deloof,et al.  Are Leases and Debt Substitutes? Evidence from Belgian Firms , 1999 .

[120]  Ans De Vos,et al.  The added value of the HR-department: Empirical study and development of an integrated framework , 1999 .

[121]  L. Pozzi,et al.  Tax discounting and direct crowding-out in Belgium: implications for fiscal policy , 1999 .

[122]  Véronique Weets,et al.  Who will be the new auditor ? , 1999 .

[123]  N. Sierens,et al.  International Comparison of Failure Prediction Models From Different Countries: An Empirical Analysis , 1999 .

[124]  Marc Deloof,et al.  Intragroup Debt, Intragroup Guarantees, and the Capital Structure of Belgian Firms , 1999 .

[125]  Robert J. Barro,et al.  Human capital and growth in cross-country regressions , 1999 .

[126]  Gerdie Everaert,et al.  Shifts in balanced growth and public capital: an empirical analysis for Belgium , 1999 .

[127]  Ignace De Beelde,et al.  EXPECTATIONS OF USERS OF FINANCIAL INFORMATION WITH REGARD TO THE TASKS CARRIED OUT BY AUDITORS , 1999 .

[128]  P. V. Kenhoveb,et al.  Automatic Activation of the Self in a Persuasion Context , 1999 .

[129]  K. Schoors,et al.  A Payment System Failure and its Consequences for Interrepublican Trade in the Former Soviet Union , 1998 .

[130]  S. Aiyagari,et al.  Transaction Services, Inflation, and Welfare , 1998, Journal of Political Economy.

[131]  Atish R. Ghosh,et al.  Warning: Inflation May Be Harmful to Your Growth , 1998 .

[132]  J. Rogers,et al.  Inflation and the Great Ratios: Long-Term Evidence from the U.S. , 1998 .

[133]  R. Black,et al.  On the Costs and Benefits of Price Stability , 1998 .

[134]  J. Albrecht,et al.  Environmental Consumer Subsidies and Potential Reductions of CO 2 Emissions , 1998 .

[135]  Long-Run Effects of Monetary Expansion in a Two-Sector Model of Endogenous Growth , 1997 .

[136]  Hans-Jürgen Engelbrecht,et al.  International R&D spillovers, human capital and productivity in OECD economies: An empirical investigation , 1997 .

[137]  P. Sørensen,et al.  On the optimality of the Nordic system of dual income taxation , 1997 .

[138]  Peter J. Klenow,et al.  The Neoclassical Revival in Growth Economics: Has It Gone Too Far? , 1997, NBER Macroeconomics Annual.

[139]  Todd E. Clark.  CROSS‐COUNTRY EVIDENCE ON LONG‐RUN GROWTH AND INFLATION , 1997 .

[140]  Francesco Caselli,et al.  Reopening the convergence debate: A new look at cross-country growth empirics , 1996 .

[141]  R. Barro.  Determinants of Economic Growth: A Cross-Country Empirical Study , 1996 .

[142]  Ruth Judson,et al.  Inflation, Volatility and Growth , 1996 .

[143]  William B. English.  Inflation and financial sector size , 1996 .

[144]  Jan Bouckaert,et al.  Monopolistic competition with a mail order business , 2000 .

[145]  Nazrul Islam,et al.  Growth Empirics: A Panel Data Approach , 1995 .

[146]  William R. Easterly,et al.  Inflation Crises and Long-Run Growth , 1995 .

[147]  Paul Pecorino.  Inflation, human capital accumulation and long-run growth☆ , 1995 .

[148]  Michael Sarel,et al.  Nonlinear Effects of Inflation on Economic Growth , 1995, SSRN Electronic Journal.

[149]  Capital Mobility, Fiscal Policy and Growth Under Self-Financing of Human Capital Formation , 1995 .

[150]  Jess Benhabib,et al.  The role of human capital in economic development Evidence from aggregate cross-country data , 1994 .

[151]  Paul Gomme.  Money and growth revisited , 1993 .

[152]  W. Buiter,et al.  Permanent International Productivity Growth Differentials in an Integrated Global Economy , 1992 .

[153]  B. Ravikumar,et al.  Public versus Private Investment in Human Capital: Endogenous Growth and Income Inequality , 1992, Journal of Political Economy.

[154]  C. Yip,et al.  Examining the long-run effect of money on economic growth , 1992 .

[155]  José De Gregorio.  The Effects of Inflation on Economic Growth: Lessons from Latin America , 1991, SSRN Electronic Journal.

[156]  D. Weil,et al.  A Contribution to the Empirics of Economic Growth Author ( s ) : , 2008 .

[157]  Allan Drazen,et al.  Threshold Externalities in Economic Development , 1990 .

[158]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[159]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[160]  M. Feldstein.  Inflation, tax rules, and capital formation , 1984 .

[161]  Joseph T. Williams.  Uncertainty and the Accumulation of Human Capital over the Life Cycle , 1979 .

[162]  H. Uzawa,et al.  Preference, production, and capital: Optimum technical change in an aggregative model of economic growth , 1965 .

[163]  P. Samuelson.  An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money , 1958, Journal of Political Economy.