What is it about?
In an economy with nominal debt, monetary expansion may mitigate liquidity risks of investment projects and stimulate economic growth in the long run. I also suggest that the magnitude of financial development and the aggregate liquidity demand help explain the mixed empirical evidences.
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Why is it important?
A classic topic in monetary economics
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This page is a summary of: INFLATION, LIQUIDITY, AND LONG-RUN GROWTH, Macroeconomic Dynamics, December 2016, Cambridge University Press,
DOI: 10.1017/s136510051600119x.
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