government sometimes uses the inflation tax because it is the only way to balance its budget. Thus, inflation occurs, at least … two sources of revenue, a flat-rate tax on labor income and the inflation tax. The key assumption is that the tax on labor … income cannot vary over time. The government can issue debt, however. Thus, when spending is high, it can use the inflation …

alternative to money in transactions and is subject to productivity shocks. The model provides some improvement on certain puzzles …, in particular by capturing the procyclic movements of monetary aggregates, inflation and interest rates. And its …

the inertial response of inflation. The model incorporates labor market frictions, capital accumulation, and nominal price …

of two important empirical debates. First, to what extent properly measured marginal costs affect inflation dynamics …. Second, to what extent purely forward looking inflation can be reconciled with the data. In this paper, we show heterogeneity … estimator, and is not the same for marginal costs or for expected inflation. In particular, under plausible parameter values …

This paper investigates the welfare and output effects of inflation in a monetary economy with search frictions and … post prices. If prices can be adjusted at no cost, an increase in inflation reduces both the frequency and the intensity of … trades, as well as welfare. In the presence of menu costs, inflation can raise both the intensity and the frequency of trades …

buy the market good. An increase in inflation raises the price of the corruption service, reduces the non-market good …

, as well as the distribution of money. As inflation decreases, agents are induced to participate less frequently in the … participation and higher heterogeneity in money holdings across agents. The welfare costs of inflation implied are different from … previous papers in the literature since inflation can distort the agents consumption profile, affect market participation, and …