Abstract

ROMERO, José. Monetary expansion and economic growth: an alternative view. Inv. Econ [online]. 2000, vol.60, n.232, pp.67-90. ISSN 0185-1667.

This paper presents an alternative to the traditional model of growth. Instead of assuming an inelastic work supply, this alternative model pre-supposes the existence of surplus labour in the economy. The model establish that said surplus is due to insufficient capital goods in the economy, and that the remedy to the situation lies precisely in utilizing part of the surplus labour in the construction of capital goods. Hence the model recommends an expansion of investment spending, financed by new money and orientated towards the construction of particular types of capital goods. This kind of capital goods should be the sort that does not require the use of capital in its construction, so that any money available is not diverted from other areas of need in the economy. Thus, operating this system of employing surplus labour in the construction of capital projects without actually investing capital, has the effect of accelerating the permanent accumulation of capital without having to forego the production of other goods. Monetary expansion thus rientated, does not prejudice anyone permanently in absolute terms. As a result, the inflationary cost is minimal and transitory, and prices may even come down following monetary expansion.

        · abstract in Spanish     · text in Spanish     · Spanish ( pdf )