Can Tighter Money Now Mean Higher Inflation Now?

Henrik D Schulze

Journal of Money, Credit and Banking, 1998, vol. 30, issue 3, 404-10

Abstract: Thomas J. Sargent and Neil Wallace (1981) presented, using a 'spectacular example,' the surprising result that a decrease in the growth rate of money may actually increase the current rate of inflation. The author shows that their result ceases to hold when an alternative solution with lower inflation is considered. On the other hand, their point was just to show the existence of a spectacular example. By changing the parameters in a suitable way, it is indeed possible to construct an example which proves their point.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:30:y:1998:i:3:p:404-10

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