Growth, Inflation, and Banking: The Role of Human Capital

This book concentrates on the role of human capital as a growth engine in the process of economic development and its effect on a better explanation of the long-run relationship between growth, inflation and other monetary phenomena. The first part of the book provides a general theory of how the development of countries could progress via different stages of growth using an extended Lucas model with external benefits of human capital through a diffusion of new knowledge. The second part of the book proposes an extension of the standard Lucas model by the introduction of money and an explicit banking sector allowing to model the interactions between real and monetary phenomena. The key mechanism that helps to explain the evidence is the ability of the representative consumer to choose between competing payment mechanisms, money and credit.