This paper examines the incidence and welfare costs of inflation in the presence of financial market frictions and home production. The results suggest that financing constraints on firms' working capital expenditures significantly increase the welfare costs relative to the standard...

Ball (1997) shows using a small closed economy model that nominal GDP targeting can lead to instability. This paper extends Ball's model to uncover the role inflation expectations play in generating this instability. By changing the process by which inflation expectations are formed in the...

Northwest Arkansas Convention Center, Rogers, Ark, June 4, 2008

Macroeconomics Advisers' Quarterly Outlook Meeting, St. Louis, June 11, 2008