Education, Endogenous Human Capital, and Monetary Economic Growth with MIU Approach
Year: 2013 Volume: 7 Issue: 2 Pages: 100-118
Abstract: This study builds a monetary growth model with inflation policy and education. The model is a synthesis of the Uzawa-Lucas two-sector growth model and traditional monetary model with the money-in-utility (MIU) approach. We show how money, physical capital and human capital interact over time under exogenous inflation policy in a free market economy. The dynamics of the economy is described by three differential equations. We show that the monetary economic system has a saddle equilibrium point. We simulate motion of the economic system and carry out comparative statics analysis with regards to the monetary policy, propensities to save wealth and to receive education.
JEL classification: I25, O41, E50
Keywords: Economic growth, MIU approach, inflation policy, physical capital, education and human capital, learning through consuming
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