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Inflation function of the money supply and level of unemployment under equilibrium conditions in a market system

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Abstract

Based on a mathematical model of market self-regulation of inflation, it is shown that a positive inflation rate is the necessary condition of annual economic growth. Inflation is less by one than the product of money deflator and production deflator. The money deflator is proportional to the money supply in annual circulation, and it is inversely proportional to the cost of the capital invested in production sphere. The production deflator is an increasing function of the level of unemployment. An analysis of market self-regulation of inflation is illustrated by the example of the Ukraine economy.

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Authors and Affiliations

  1. Technical Center of NAS of Ukraine, Kiev, Ukraine

    B. B. Dunaev

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  1. B. B. Dunaev
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Translated from Kibernetika i Sistemnyi Analiz, No. 4, pp. 146–161, July–August 2007.

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Dunaev, B.B. Inflation function of the money supply and level of unemployment under equilibrium conditions in a market system. Cybern Syst Anal 43, 586–597 (2007). https://doi.org/10.1007/s10559-007-0084-0

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  • DOI: https://doi.org/10.1007/s10559-007-0084-0

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