inflation rate, with and with- out an increase in the risk premium on equities, was then simulated with a number of model … cost was 3 percentage points less than that for corporate capital) and the manner in which inflation magnifies it (the … finance instruments would overcome this reallocation but at the expense of corporate capital. Only a reduction in inflation or …

The fiscal gains from, and hence the political incentives to, an increase in inflation rate of ten percentage points …. The welfare costs of such an inflation increase would have been even larger, however, and would thus have reduced net … welfare. Possible institutional reforms, aimed at making the political costs of inflation more equal to the social costs, are …