Monetary policy and economic growth

Abstract

Traditionally different factors and variables have been considered in the economic growth models. Following Solow's model, economists considered physical capital and technology during 1950s-1980s as the main forces that promote economic growth. With the introduction of endogenous growth models, new forms of capital were introduced in the production function; human capital, public capital income distribution and more recently social capital. The improvement of statistical information has favored the introduction of different kind of variables in the economic growth models. However, monetary policy has not been sufficiently analyzed in this literature. Except in the case of a few approaches, it is considered that monetary policy affects economic growth indirectly through other variables that directly have any influence on growth, for instnace, inflation. The main goal of this paper is to show the way monetary policy could have effects on economic growth process, considering some approaches, such as Tobin, Levhari and Patinkin, Schumpeter and Kaleckian models.