Fertility, Income Growth and Inflation

This paper sets an endogenous fertility model with human capital accumulation and monetary policy in a closed economy, with subsequent examination of how fertility, education investment for children, and the inflation rate change. Results of theoretical analysis indicate that the child allowance raises fertility and reduces educational investment. However, the effect of the subsidy for education investment on fertility and educational investment is ambiguous because of the closed economy. Because of the change of fertility and income growth, the inflation rate can be changed by the child care policy. An increase in monetary stock policy raises human capital growth because the physical capital accumulation is facilitated.