This paper presents a political economy model of inflation as a result of social conflict. Agents are heterogeneous in … terms of income. Agents’ income levels determine their ability to hedge against the effects of inflation. The interaction of … model makes a number of predictions concerning which environments are conducive to the emergence of inflation. Inflation …

We study how constrained fiscal policy can affect regional inflation and output in a two-region model of a monetary … union with sticky prices and distortionary taxation. Both government expenditure and taxes can be used to stabilize regional … variables; however, the best welfare outcome is obtained under constant taxes and constant regional inflations. With cooperation …

inflation tax (the reduction in the real value of the stock of base money due to inflation and (4) the operating profits of the … central bank, or the taxes paid by the Central Bank to the Treasury. To understand the relationship between these four … doing this can we appreciate the financial constraints on the Central Bank’s ability to pursue and achieve an inflation …

paper is that, once the open economy aspect of the policy problem is considered, it is not optimal to smooth taxes following … idiosyncratic shocks. Even when prices are flexible and inflation can costlessly act as a shock absorber to restore fiscal … economy, the introduction of sticky prices can reduce the optimal volatility of taxes. …

It has been suggested in the literature that taxes and subsidies play an important role in explaining the differences …

valueadded only exceeding cost if R&D grows at or below the rate of inflation. …