The Causes, Costs, and Compensations of Inflation: An Investigation of Three Problems in Monetary Theory

Business & Investing

The Causes, Costs, and Compensations of Inflation: An Investigation of Three Problems in Monetary Theory Publisher: Edward Elgar
Language: English
ISBN: 1845424840
Paperback: 272 pages
Data: Mar 2007
Format: PDF
Description: The book begins by securing the Quantity Theory of Money from certain critiques. The theory is defended from the `fiscal theory of the price level’ by a refinement of the theory of money demand, and from post Keynesianism by the construction of a theory of the supply of inside money. To cope with the endogeneity of outside money, a simple and tractable neo-Wicksellian theory of inflation is advanced, which is shown to exhibit a striking homology with the Quantity Theory. The author then traces the costliness of inflation, not to any disturbance of the money market, but to the damage inflation does to the bond market’s function of sharing out disturbances to consumption caused by technological shocks. The same damage, however, imparts an egalitarian dynamic to accumulation that produces a convergence in the wealth of economic interests, which will not occur without risky inflation.