More on the Inflation Tax and the Value of Equity

Keith T. MacKinnon

Canadian Journal of Economics, 1987, vol. 20, issue 4, 823-31

Abstract: A cash-in-advance macro model is presented in which dividends are distributed at the end of each p eriod, but where all other money receipts may be spent immediately on output and labor markets. If money grows at a constant rate, only th e real price of equity will be inversely related to inflation in the steady state. If the money supply is allowed to grow at an increasing rate, however, agent welfare will decline.

Date: 1987
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