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Dynamický model stability inflačného procesu na báze kvantitatívnej teórie peňazí
[Dynamic model of inflation stability based on quantity theory of money]

Author

Listed:
  • Jaroslav Husár
  • Karol Szomolányi

Abstract

In this paper the stability of an inflationary process is examined. A dynamic model of the inflation has been developed based on the quantity theory of money. Some theorists say that any rate of inflation other than zero is inherently instable. They say that as people become aware of the fact of continues inflation, however slow, they will anticipate inflation and this anticipation generates inflation. We showed that there exists a model, which helps us to understand that inflation is not necessarily explosive. We follow the ideas of Ph. Cagan.

Suggested Citation

  • Jaroslav Husár & Karol Szomolányi, 2009. "Dynamický model stability inflačného procesu na báze kvantitatívnej teórie peňazí [Dynamic model of inflation stability based on quantity theory of money]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(1), pages 48-57.
    • Handle: RePEc:prg:jnlpol:v:2009:y:2009:i:1:id:669:p:48-57
    DOI: 10.18267/j.polek.669
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    References listed on IDEAS

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    1. Thomas J. Sargent & Noah Williams, 2005. "Impacts of Priors on Convergence and Escapes from Nash Inflation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(2), pages 360-391, April.
    2. Gali, Jordi & Gertler, Mark & Lopez-Salido, J. David, 2001. "European inflation dynamics," European Economic Review, Elsevier, vol. 45(7), pages 1237-1270.
    3. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
    4. Wyplosz, Charles, 2001. "Do We Know How Low Inflation Should Be?," CEPR Discussion Papers 2722, C.E.P.R. Discussion Papers.
    5. Martin Feldstein, 1999. "The Costs and Benefits of Price Stability," NBER Books, National Bureau of Economic Research, Inc, number feld99-1.
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    More about this item

    Keywords

    inflation; dynamic model; expected inflation; inflation process stability;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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