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The Inflation Tax in a Real Business Cycle Model
Thomas F. Cooley and Gary D. Hansen
The American Economic Review
Vol. 79, No. 4 (Sep., 1989), pp. 733-748
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/1827929
Page Count: 16
You can always find the topics here!Topics: Economic inflation, Economic growth models, Economic fluctuations, Steady state economies, Economic growth rate, Economic models, Economic modeling, Money supply, Financial investments
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Money is incorporated into a real business cycle model using a cash-in-advance constraint. The model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money. In addition, the welfare cost of the inflation tax is measured and the steady-state properties of high and low inflation economies are compared.
The American Economic Review © 1989 American Economic Association