We study the effects of money (anticipated inflation) on capital formation. Previous papers on this topic adopt reduced …-form approaches, putting money in the utility function or imposing cash in advance, but use otherwise frictionless models. We follow a … literature that is more explicit about the frictions making money essential. This introduces several new elements, including a …

We study models incorporating money, household production, and investment in housing. Inflation, as a tax on market … activity, encourages substitution into household production, and thus investment in household capital. Hence, inflation … without it, especially when home and market goods are close substitutes …

, productivity, the price level, money and credit stocks during each episode. Two booms stand out in terms of their length and rate … consistent relationship between inflation and stock market booms, though booms have typically occurred when money and credit …