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The Welfare Implications of Uneven Inflation

In: Inflation Theory and Anti-Inflation Policy

Author

Listed:
  • Dwight Jaffee

    (Princeton University)

  • Ephraim Kleiman

    (Hebrew University)

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.

Suggested Citation

  • Dwight Jaffee & Ephraim Kleiman, 1977. "The Welfare Implications of Uneven Inflation," International Economic Association Series, in: Erik Lundberg (ed.), Inflation Theory and Anti-Inflation Policy, chapter 11, pages 285-313, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-03260-0_11
    DOI: 10.1007/978-1-349-03260-0_11
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    Citations

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    Cited by:

    1. Ana Buisán & Fernando Restoy, 1986. "Inflación y variabilidad de los precios relativos en España (1976-1983)," Investigaciones Economicas, Fundación SEPI, vol. 10(2), pages 327-356, May.
    2. Blejer, Mario I. & Leiderman, Leonardo, 1981. "Inflation and Relative-Price Variability in the Open Economy," Foerder Institute for Economic Research Working Papers 275329, Tel-Aviv University > Foerder Institute for Economic Research.
    3. Batchelor, Roy & Orr, Adrian, 1991. "Inflation uncertainty, inflationary shocks and the credibility of counterinflation policy," European Economic Review, Elsevier, vol. 35(7), pages 1385-1397, October.
    4. A. Steven Holland, 1984. "Does higher inflation lead to more uncertain inflation?," Review, Federal Reserve Bank of St. Louis, vol. 66(Feb), pages 15-26.
    5. Hans Blomqvist, 1984. "On the sources and macroeconomic implications of nonuniform and uncertain price expectations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 120(2), pages 366-375, June.
    6. James Chan-Lee, 1980. "A review of recent work in the area of inflationary expectations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(1), pages 45-86, March.
    7. Diego Ferreira & Andreza Aparecida Palma, 2018. "Inflation And Inflation Uncertainty In Latin America: A Time-Varying Stochastic Volatility In Mean Approach," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 125, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. Davis, George K & Kanago, Bryce E, 2000. "The Level and Uncertainty of Inflation: Results from OECD Forecasts," Economic Inquiry, Western Economic Association International, vol. 38(1), pages 58-72, January.
    9. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
    10. B. Balaji & S. Raja Sethu Durai & M. Ramachandran, 2016. "The Dynamics Between Inflation and Inflation Uncertainty: Evidence from India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(1), pages 1-14, June.
    11. Smith, Andrew & MacKinnon, Neil J, 1987. "Inflation and Relative Price Variability: The U.K. Experience over the Last 30 Years," Scottish Journal of Political Economy, Scottish Economic Society, vol. 34(2), pages 145-160, May.

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