Disequilibrium Inflation

Yoko Furukawa

MPRA Paper from University Library of Munich, Germany

Abstract: I construct a model that examines the behavior of the inflation rate considering multiple functions of money. The model demonstrates that Taylor Rules are effective when the inflation rate moves to the same direction with regard to money as a medium of exchange and a storage of value. Under deflation, these two functions of money diverge oppositely and that leads to a liquidity trap which the economy struggles to escape.

Keywords: inflation rate; disequilibrium; money. (search for similar items in EconPapers)
JEL-codes: E31 E43 E50 (search for similar items in EconPapers)
Date: 2026-01-27
New Economics Papers: this item is included in nep-cba and nep-mon
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