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.
The major work on this paper was completed at the Institute for International Economic Studies, University of Stockholm. We are grateful for the discussion and comments of our colleagues there, and for the support provided by the Institute. We thank Professors Stanley Fisher, Jacob Frenkel and Robert Gordon, and also Jan Haggstrom and Anita Blaustwin who carried out the calculations.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Robert J. Barro, ‘Inflationary Finance and the Welfare Cost of Inflation’, Journal of Political Economy (September/October, 1972).
George de Menil, ‘Rationality in Popular Price Expectations’, mimeo (1974).
George de Menil and Surjit Bhalla, ‘Direct Measurement of Popular Price Expectations’, American Economic Review (March, 1975).
Revold Entov, ‘Some Problems of General Price Movements’, chapter 5 in this volume.
Edward Foster, ‘Costs and Benefits of Inflation’, Studies in Monetary Economics #1, Federal Reserve Bank of Minneapolis (1972).
H. Glejser, ‘Inflation, Productivity, and Relative Prices — A Statistical Study’, Review of Economics and Statistics(1965).
Robert J. Gordon, ‘Steady Anticipated Inflation: Mirage or Oasis?’, Brookings Economic Papers(1971:2).
F. Thomas Juster, ‘Savings Behavior, Uncertainty and Price Expectations’, paper prepared for the Conference on the Economic Outlook, Ann Arbor (November 15 – 16, 1973).
David Laidler, ‘The Welfare Costs of Inflation in Neoclassical Theory — Some Unsettled Issues’, chapter 12 in this volume.
Robert Mundell, ‘Inflation and Real Interest’, Journal of Political Economy (June, 1963).
Arthur M. Okun, ‘The Mirage of Steady Inflation’, Brookings Economic Papers (1971:2).
Robert C. Vogel, ‘The Dynamics of Inflation in Latin America, 1950 – 1969’. American Economic Review (March, 1974).
Author information
Authors and Affiliations
Editor information
Copyright information
© 1977 International Economic Association
About this chapter
Cite this chapter
Jaffee, D., Kleiman, E. (1977). The Welfare Implications of Uneven Inflation. In: Lundberg, E. (eds) Inflation Theory and Anti-Inflation Policy. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-03260-0_11
Download citation
DOI: https://doi.org/10.1007/978-1-349-03260-0_11
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-03262-4
Online ISBN: 978-1-349-03260-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)