2008-02-152008-02-152006-03Gupta, R 2006, 'Growth-effects of inflation targeting : the role of financial sector development', University of Pretoria, Department of Economics, Working paper series, no. 2006-10. [http://web.up.ac.za/default.asp?ipkCategoryID=736&sub=1&parentid=677&subid=729&ipklookid=3]http://hdl.handle.net/2263/4454The paper develops a dynamic general equilibrium monetary endogenous growth model of a closed economy inhabited by consumers, firms, a Cournotian monopolistically competitive banking system, besides, an inflation-targeting monetary authority, and, in turn, analyzes the effect of a tight monetary (disinflationary) policy on growth. We show that the effect of lower inflation target on growth is ambiguous, with the ultimate effect depending on the initial level of growth, the individual bank size, the degree of risk aversion, the elasticity of output with respect to capital, the discount factor and the size of the cash-reserve ratio.223490 bytesapplication/pdfenUniversity of Pretoria, Department of EconomicsEconomic growthFinancial sector developmentInflation (Finance)Economic developmentInflation targetingWorking Paper