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 …

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

Developing country inflation is in the headlines again. Mainstream macroeconomics typically ignores the role of … monetary sources of inflation in the presence of real wage resistance and distributional conflict. The analysis shows that the … relatively small shock leads to sustained and accelerating inflation and a wage-price spiral, thanks to conflicting claims on …