This paper shows that the optimal extraction of seigniorage implies a strong tendency for inflation to fall over time … inflation rate each period in a discretionary manner. One way to view the model is as a synthesis of the "tax-smoothing" theory … of government deficits, which predicts that the inflation tax follows approximately a martingale, and of models of …

In the late 1970s countries in Latin America's Southern Cone attempted to lower domestic inflation rates through the … appreciation may result.While unanticipated, permanent inflation changes are neutral in the paper,anticipated inflation is neutral …

This paper examines the short-run relation between anticipated inflation and the real rate of interest in a model where … floating -- apply equally to a closed economy. The paper shows that an increase in the expected inflation rate depresses the … is determinate in the floating-rate case, the real interest rate is invariant with respect to inflation …