A Simple Analytical Model of the Adverse Real Effects of Inflation

Eduardo Bastian () and Mark Setterfield
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Eduardo Bastian: Federal University of Rio de Janeiro (UFRJ)

No 1519, Working Papers from New School for Social Research, Department of Economics

Abstract: The essential insight advanced in this paper is that the claim that inflation can impair growth makes most sense in the context of a monetary production economy, wherein a role for money in the determination of real activity is posited from the very start. We construct a model of inflation and growth that distinguishes between the properties of various qualitatively different inflation regimes. It is then shown how some of these regimes, by undermining confidence in various nominal contracts that are central to the process of accumulation in a monetary production economy, can adversely affect growth.

Keywords: Inflation; strato-inflation; hyper-inflation; indexation; conflicting claims; uncertainty; growth. (search for similar items in EconPapers)
JEL-codes: E12 E31 O41 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-08
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://www.economicpolicyresearch.org/econ/2015/NSSR_WP_192015.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: A simple analytical model of the adverse real effects of inflation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:1519

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