Author(s)

Shunsuke Shinagawa¹, Tomohiro Inoue²

¹Faculty of Economics, Kanagawa University, Yokohama, Japan.
²Faculty of Economics, Komazawa University, Tokyo, Japan.

In this study, we introduce nominal wage stickiness into an endogenous growth model based on R & D. This study examines how money growth affects long-run economic growth. We find that there exists a unique balanced growth path for sufficiently high rates of money growth, and that the economy exhibits sustained growth based on sustained R & D. Faster money growth results in greater employment and faster economic growth along such a balanced growth path. Furthermore, under some parameter restrictions, no balanced growth path exists for low rates of money growth; the economy is trapped in a steady state without long-run growth. These results suggest that money growth may be an important factor for long-run economic growth.

Endogenous Growth, New Keynesian Phillips Curve, Nominal Rigidities, Monetary Growth Theory

Shinagawa, S. and Inoue, T. (2016) R & D-Based Growth Model with Nominal Wage Stickiness. Theoretical Economics Letters, 6, 854-867. doi: 10.4236/tel.2016.65089.