This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces … transaction costs, a fall in the costs of inflation is equivalent to financial innovation. This can be caused by paying interest … on deposits, indexing money, or “dollarizing.” Results indicate that financial innovation raises welfare in low inflation …

transmission mechanism through which domestic policies affected the dynamics of inflation was relatively small during a period of … high but relatively stable inflation (January 1978-85), it became an important factor in the inflation process during the …

estimated revenue-eroding effects of inflation within the standard model of inflationary finance. The evidence indicates a wide … the sample countries, appears to have substantially offset gains from the inflation tax, thereby severely restricting the …

In light of the persistence of moderate inflation in many transition economies, this paper analyzes whether inflation …. Using a new database for 21 countries, the effect of relative price variability on inflation is estimated within a framework … controlling for nominal and real shocks. Money and wage growth were the most important determinants of inflation; relative price …

This paper examines the relative importance of monetary growth and exchange rate depreciation as causes of inflation in … autoregression (VAR) analysis suggest that both monetary expansion and exchange rate adjustments cause inflation in a number of these … countries. However, the failure of the tests to attribute the bulk of the variance in inflation in most of the countries to …

Although accommodative policies and widespread indexation may account for the persistence of high inflation, they … cannot explain changes in the inflation rate. This paper examines the causes of such changes for the high-inflation episodes … distinguish between the “fiscal” and “balance of payments” views of the causes of high inflation by computing historical …

additional investment for enhancing growth. If there are lags in tax collection, an increase in inflation erodes real fiscal … as increases the welfare cost of inflation. As such, the optimal rate of monetary expansion, equilibrium capital …

In this paper three possible reasons are examined for a sluggish inflation response to a hard currency peg. Models of … credibility and the speed of private sector learning, which are shown to have a major impact on the speed of inflation adjustment …. But even if individual agents believe the government will not devalue, it is shown that inflation inertia can still arise …

This paper explains why sovereign issuers of reserve currencies do not use unexpected inflation to repudiate their … excessive money creation. It is shown that even without policy precommitment or aversion to inflation, the availability of … alternative currencies can support an equilibrium with a finite, time consistent inflation rate …

We show that the presence of nominal non-indexed government debt could give rise to more than one equilibrium inflation …