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On the Timing of Production Decisions in Monetary Economies

Author

Listed:
  • Nejat Anbarci

    (Deakin University [Burwood])

  • Richard Dutu

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Ching-Jen Sun

    (Deakin University [Burwood])

Abstract

In most macroeconomic models inflation tends to be harmful. In this article, we show that by simply changing the timing of production decisions by firms from "on demand" to "in advance," some inflation can boost welfare as long as goods are sufficiently perishable. The main conclusion from this research is that by effectively hiding the strategic interaction between supply and demand, assuming production on demand is not without loss of generality.

Suggested Citation

  • Nejat Anbarci & Richard Dutu & Ching-Jen Sun, 2019. "On the Timing of Production Decisions in Monetary Economies," Post-Print hal-02313851, HAL.
    • Handle: RePEc:hal:journl:hal-02313851
    DOI: 10.1111/iere.12359
    Note: View the original document on HAL open archive server: https://hal.science/hal-02313851
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    References listed on IDEAS

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    More about this item

    Keywords

    Timing; Perishability; Production; Money; Inflation; Search;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D2 - Microeconomics - - Production and Organizations
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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