DP19 The Costs of Inflation: Some Theoretical Issues

Author(s): John Hardman Moore
Publication Date: May 1984
Keyword(s): Indexation of Loans, Inflation, Stock Market
JEL(s): 134, 313, 315
Programme Areas: Applied Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=19

Although for the most part this paper is concerned with others' work, it is not a survey of the literature. Notable omissions are: the shoe-leather effect, the Tobin effect, the real effects of nominal (government) institutions. The first part looks at the relationship between inflation, relative prices and inefficiency. Inter alia, there is a critique of the way the price misperceptions model has been used in applied work, and a new model of the effects of consumers thinking in nominal terms. The second part considers the consequences of, and possible reasons for, the non-indexing of loans. Finally, the relation between inflation and the stock market is discussed.