The Welfare Implications of Uneven Inflation

Dwight Jaffee and Ephraim Kleiman
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Dwight Jaffee: Princeton University
Ephraim Kleiman: Hebrew University

Chapter 11 in Inflation Theory and Anti-Inflation Policy, 1977, pp 285-313 from Palgrave Macmillan

Abstract: Abstract The assumption of ‘steady’ inflation has proven to be a common starting point for most welfare analysis of inflation. As defined, steady inflation has three basic properties (1) it is perfectly foreseen, so that the expected inflation rate, which alone influences behaviour, is in fact the inflation rate actually realised; (2) market institutions adjust sufficiently to accommodate the inflation; one example of such an adjustment would be the use of price-indexed contracts; other examples will be given below; (3) the effects of inflation are uniform over all commodity groups; that is, inflation causes no changes in relative prices.

Keywords: Inflation Rate; Welfare Loss; Relative Prex; Nominal Wage; Welfare Cost (search for similar items in EconPapers)
Date: 1977
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DOI: 10.1007/978-1-349-03260-0_11

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