Inflation level and inflation volatility: A seigniorage argument

Mikhail Dmitriev and Erasmus Kersting ()

Economics Letters, 2016, vol. 147, issue C, 112-115

Abstract: We use a standard dynamic general equilibrium model with flexible prices, money in the utility function, exogenous fiscal policy and accommodating monetary policy to analytically demonstrate the positive relationship between the steady state level of inflation and business cycle inflation volatility. This result holds in the presence of unique as well as multiple equilibria.

Keywords: Inflation; Inflation uncertainty; Seigniorage (search for similar items in EconPapers)
JEL-codes: E31 E41 E52 E62 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:147:y:2016:i:c:p:112-115

DOI: 10.1016/j.econlet.2016.08.034

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