Suchergebnisse

In this paper an attempt has been made to find the inflation
rates which were faced by households belonging to different income
brackets and living in different areas. The results of this study do not
show any consistent pattern of inflation being higher or lower for the
rich or the poor households. During 1971-72 and between 1978-79 and
1980-81, households in the lower income brackets were found to be facing
lower inflation rates. These were the years when food prices rose at
lower rates than those of the prices of non-food items. These
differences, however, disappeared in 1981-82 when food prices rose
sharply, resulting in a higher inflation rate for the poor than for the
rich. The numerical magnitudes of the differences were, however, not
very high.

In our incomplete markets economy households choose portfolios consisting of risky (uninsurable) capital and money. Money is a bubble, it has positive value even though it yields no payoff. The market outcome is constrained Pareto inefficient due to a pecuniary externality. Each individual agent takes the real interest rate as given, while in the aggregate it is driven by the economic growth rate, which in turn depends on individual portfolio decisions. Higher inflation due to higher money growth lowers the real interest rate on money and tilts the portfolio choice towards physical capital investment. Modest inflation boosts growth rate and welfare.

"In an economy with nominal rigidities in both an intermediate good sector and a finished good sector, and thus with a natural distinction between CPI and PPI inflation rates, a benevolent central bank faces a tradeoff between stabilizing the two measures of inflation: a final output gap, and unique to our model, a real marginal cost gap in the intermediate sector, so that optimal monetary policy is second-best. We discuss how to implement the optimal policy with minimal information requirement and evaluate the robustness of these simple rules when the central bank may not know the exact sources of shocks or nominal rigidities. A main finding is that a simple hybrid rule under which the short-term interest rate responds to CPI inflation and PPI inflation results in a welfare level close to the optimum, whereas policy rules that ignore PPI inflation or PPI sector shocks can result in significant welfare losses"--Federal Reserve Bank of Philadelphia web site