Avoiding the inflation tax
By: Huberto M. Ennis
Contributors: Federal Reserve Bank of Richmond
Series: Working paper -- no. 05-10; Working paper (Federal Reserve Bank of Richmond : Online) -- no. 05-10.
Publisher: Federal Reserve Bank of Richmond
Published: 2005
Place of publication: Richmond, Va.]
Language: eng
Format: [electronic resource] /
Description: "I study the effects of inflation on the purchasing behavior of buyers in an economy where money is essential for certain transactions (as in Lagos and Wright, 2005). A long-standing intuition in this subject is that when inflation increases, agents try to spend their money holdings more speedily. The standard framework fails to capture this kind of effect (Lagos and Rocheteau, 2005). I propose a simple modification of the model in which trading of goods and rebalancing of money holdings happen less frequently. In such a framework, I show that higher inflation induces buyers to search for transactions more intensively and buy goods of worse quality. The modification proposed also sheds new light on the connection between the search-theoretic and the inventory-theoretic models of money."--Federal Reserve Bank of Richmond web site.
Notes: Title from PDF file as viewed on Oct. 2, 2006.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.