A constant price level facilitates cooperation among firms whereas steady inflation and deflation rates lower firms …' ability to cooperate. In an experimental market with price competition we show that both inflation and deflation signicantly … welfare: depending on the market structure, inflation and deflation lead to significantly lower real prices and higher welfare. …

interest rate has to respond more than one-for-one to fluctuations in the inflation rate. In our setting, the average inflation … rate fluctuates around the inflation target if the computerized central bank obeys the Taylor principle. If the Taylor … principle is violated, then the average inflation rate persistently deviates from the target. We find that these deviations from …

manifestation of this phenomenon is the tendency to neglect future inflation in intertemporal investment decisions. Empirical … evidence for this “inflation ignorance” is hard to establish due to the host of factors that simultaneously change with the … inflation rate. We avoid these identification issues by conducting a controlled and fully incentivized investment experiment. We …

Poor households report significantly higher inflation expectations than rich households. We assess, both theoretically … about aggregate inflation. Using data on shopping experiences, we show that the inflation expectations of each income group … depend on the group's past grocery experiences as well as on past aggregate inflation. To explain this finding, we build a …