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UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY

UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economic Inquiry Wiley

UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY

Economic Inquiry , Volume 31 (1) – Jan 1, 1993

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References (16)

Publisher
Wiley
Copyright
Copyright © 1993 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0095-2583
eISSN
1465-7295
DOI
10.1111/j.1465-7295.1993.tb00864.x
Publisher site
See Article on Publisher Site

Abstract

In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output.

Journal

Economic InquiryWiley

Published: Jan 1, 1993

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