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Search and Price Dispersion in an Inflationary Economy

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  • Fershtman, Chaim
  • Fishman, Arthur

Abstract

Ve present a simple overlapping generations search model of an inflationary economy in which money is the only store of value and identify an inflation based endogenously determined search cost. The latter reflects the fact that resources required for future consumption are random and are thus exposed to excessive erosion. Ve analyze the effect of the constant inflation rate on the equilibrium real price distribution, output and welfare. An increase in the rate of inflation increases production efficiency and may increase welfare.

Suggested Citation

  • Fershtman, Chaim & Fishman, Arthur, 1989. "Search and Price Dispersion in an Inflationary Economy," Foerder Institute for Economic Research Working Papers 275475, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275475
    DOI: 10.22004/ag.econ.275475
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    References listed on IDEAS

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    Cited by:

    1. Mariano Tommasi, 1992. "The Welfare Effects of Inflation, The Consequences of Price Instability on Search Markets," UCLA Economics Working Papers 655, UCLA Department of Economics.

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