Advertisement

Towards an Evaluation of the Costs and Benefits of a (Dis-) Inflationary Policy in the Federal Republic of Germany

  • Wolfgang Franz
Conference paper
Part of the Studies in Contemporary Economics book series (CONTEMPORARY)

Abstract

Having presented their well-known systematic account of the real effects of inflation, Stanley Fischer and Franco Modigliani (1978) conclude their article with the hope that their list will assist in organizing attempts to measure the costs and benefits of inflation. This is exactly what this paper attempts to do for the Federal Republic of Germany (FRG). Since inflation is not an exogenous event in an economy, however, it seems to be necessary to include an evaluation of alternative policy choices such as the output cost of a disinflation policy.

Keywords

Inflation Rate Real Interest Rate Welfare Loss Nominal Interest Rate Phillips Curve 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. ALEXANDER, V. and H.E. LOEF (1975), Die Messung sozialer Kosten der Inflation–Eine theoretische und empirische Problemanalyse, in: P. Harbusch und D. Wiek (eds.), Marktwirtschaft, Stuttgart, 179–193.Google Scholar
  2. BAILEY, M.J. (1956), The Welfare Cost of Inflationary Finance, Journal of Political Economy 64, 93–110.CrossRefGoogle Scholar
  3. BARRO, R. (1972), Inflationary Finance and the Welfare Cost of Inflation, Journal of Political Economy 80, 978–1001.CrossRefGoogle Scholar
  4. BUCK, A.J. and B. GAHLEN (1984), The Real Effects of Price Variability in the Federal Republic of Germany, 1953–1977, Economics Letters 15, 79–85.CrossRefGoogle Scholar
  5. BUITER, W.H. and M.H. MILLER (1983), Costs and Benefits of an Anti-Inflationary Policy: Questions and Issues, National Bureau of Economic Research, Working Paper No. 1252 ( December 1983 ), Cambridge (Mass.).Google Scholar
  6. BUSCHER, H.S. (1983), Zur Stabilität der Geldnachfrage. Eine empirische Betrachtung, Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft, Institut für Quantitative ökonomik und Statistik, Diskussionsarbeit Nr. 6/1983, Berlin.Google Scholar
  7. CARMICHAEL, J. and P.W. STEBBING (1983), Fisher’s Paradox and the Theory of Interest, American Economic Review 73, 619–630.Google Scholar
  8. CATHCART, C. (1974), Monetary Dynamics, Growth, and the Efficiency of Inflationary Finance, Journal of Money, Credit, and Banking 6, 769–790.CrossRefGoogle Scholar
  9. CLAASSEN, E.-M. (1980), Grundlagen der makroökonomischen Theorie, München.Google Scholar
  10. DARBY, M.R. (1984), The U.S. Productivity Showdown: A Case of Statistical Myopia, American Economic Review 74, 301–322.Google Scholar
  11. DEUTSCHES INSTITUT FUR WIRTSCHAFTSFORSCHUNG (1983), Zur Entwicklung der Altersstruktur des Anlagevermögens im verarbeitenden Gewerbe der Bundesrepublik Deutschland, DIW-Wochenbericht No. 49, 599–605.Google Scholar
  12. FELDSTEIN, M.S. (1976), Inflation, Income Taxes, and the Rate of Interest: A Theoretical Analysis, American Economic Review 66, 809–820.Google Scholar
  13. FELDSTEIN, M.S. (1979), The Welfare Cost of Permanent Inflation and Optimal Short-Run Economic Policy, Journal of Political Economy 87, 749–768.CrossRefGoogle Scholar
  14. FELDSTEIN, M.S., J. GREEN, and E. SHESHINSKY (1978), Inflation and Taxes in a Growing Economy with Debt and Equity Finance, Journal of Political Economy 86, 553–570.Google Scholar
  15. FISCHER, S. (1981), Towards an Understanding of the Costs of Inflation: II, in: K. Brunner and A.H. Meltzer (eds.), The Costs and Consequences of Inflation, Carnegie-Rochester Conference Series. on Public Policy 15, 5–42.Google Scholar
  16. FISCHER, S. (1982), Relative Price Variability and Inflation in the United States and Germany, European Economic Review 18, 171–196.Google Scholar
  17. FISCHER, S. and F. MODIGLIANI (1978), Towards an Understanding of the Real Effects and Costs of Inflation, Weltwirtschaftliches Archiv 114, 810–833.CrossRefGoogle Scholar
  18. FLEMMING, J.S. (1976), Inflation, Oxford.Google Scholar
  19. FRANZ, W. (1983a), Inflation und interindustrielle Lohnstruktur, Institut für Volkswirtschaftslehre und Statistik der UniversitätGoogle Scholar
  20. Mannheim, Discussion Paper No. 267–83 (December 1983), Mannheim (forthcoming in Ifo-Studien 1984 ).Google Scholar
  21. FRANZ, W. (1983b), The Past Decade’s Natural Rate and the Dynamics of German Unemployment. A Case Against Demand Policy? European Economic Review 21, 51–76.CrossRefGoogle Scholar
  22. FRANZ, W. (1984a), Challenges to the German Economy 1973–1983: Supply Shocks, Investment Slow-down, Inflation Variability, and the Underutilization of Labor, Institut für Volkswirtschaftslehre und Statistik der Universität Mannheim, Discussion-Paper No. 27784, Mannheim (forthcoming in Zeitschrift für Wirtschafts-und Sozialwissenschaften 1985 ).Google Scholar
  23. FRANZ, W. (1984b), Nicht-neutrale Effekte der Inflation auf die Preisstruktur: Theoretische Überlegungen und empirische Resultate, Jahrbücher für Nationalökonomie und Statistik (forthcoming).Google Scholar
  24. FRENKEL, J.A. (1976), Some Dynamic Aspects of the Welfare Costs of Inflationary Finance, in: R. McKinnon (ed.), Money and Finance in Economic Growth and Development, New York, 177–195.Google Scholar
  25. FRIED, J. and P. HOWITT (1983), The Effects of Inflation on Real Interest Rates, American Economic Review 73, 968–980.Google Scholar
  26. FRIEDMAN, M. (1969), The Optimum Supply of Money, in: M. Friedman (ed.), The Optimum Supply of Money and Other Essays, Chicago.Google Scholar
  27. FRISCH, H. (1983), Theories of Inflation, Cambridge (U.K.).Google Scholar
  28. GAAB, W. (1984), Nominalzins, Realzins und Güterpreise: Eine theoretische und empirische Analyse des Gibson-Paradoxons und der Fisher-Hypothese, manuscript, Mannheim.Google Scholar
  29. GORDON, R.J. (1973), The Welfare Cost of Higher Unemployment, Brookings Papers on Economic Activity 1: 1973, 133–205.CrossRefGoogle Scholar
  30. GORDON, R.J. (1982), Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment, in: M.N. Baily (ed.), Workers, Jobs, and Inflation, Washington, pp. 88–155.Google Scholar
  31. GORDON, R.J. (1983), Macroeconomics, 3rd ed., Boston.Google Scholar
  32. GORDON, R.J. and S.R. KING (1982), The Output Cost of Disinflation in Traditional and Vector Autoregressive Models, Brookings Papers on Economic Activity 1: 1982, 205–242.CrossRefGoogle Scholar
  33. HAMERMESH, D.S. (1983), Inflation and Labor-Market Adjustment, National Bureau of Economic Research, Working Paper No. 1153, (June 1983), Cambridge (Mass.).Google Scholar
  34. HAUSMAN, J. and P. RUUD (1984), Family Labor Supply with Taxes, National Bureau of Economic Research, Working Paper No. 1271 (February 1984), Cambridge (Mass.).Google Scholar
  35. LUCAS, R.E. (1981), Discussion of: Stanley Fischer, “Towards an Understanding of the Costs of Inflation: II”, in: K. Brunner und A.H. Meltzer (eds.), The Cost and Consequences of Inflation, Carnegie-Rochester Conference Series on Public Policy 15, 43–52.Google Scholar
  36. MARTY, A. (1967), Growth and the Welfare Cost of Inflationary Finance, Journal of Political Economy 75, 71–76.CrossRefGoogle Scholar
  37. MUNDELL, R.A. (1963), Inflation and Real Interest, Journal of Political Economy 71, 280–283.CrossRefGoogle Scholar
  38. MUSSA, M. (1977), The Welfare Cost of Inflation and the Role of Money as a Unit of Account, Journal of Money, Credit, and Banking 9, 276–286.CrossRefGoogle Scholar
  39. OKUN, A.M. (1975), Inflation: Its Mechanics and Welfare Costs, Brookings Papers on Economic Activity 1: 1975, 351–390.CrossRefGoogle Scholar
  40. OKUN, A.M. (1978), Efficient Disinflationary Policies, American Economic Review 68 (Papers and Proceedings), 348–352.Google Scholar
  41. PAULY, P. (1978), Theorie und Empirie des Arbeitsmarktes. Eine ökonometrische Analyse für die Bundesrepublik Deutschland, 1960–1974, Frankfurt/M.Google Scholar
  42. PHELPS, E.S. (1965), Anticipated Inflation and Economic Welfare, Journal of Political Economy 73, 1–17.CrossRefGoogle Scholar
  43. PHELPS, E.S. (1973), Inflation in the Theory of Public Finance, Journal of Economics 75, 67–82.Google Scholar
  44. RAMB, B.-T. (1983), Die horizontale Phillips-Kurve: Die QuasineutraliArbeitslosenquote bezüglich der Inflationsrate, Zeitfür Wirtschafts-und Sozialwissenschaften 103, 419–436.Google Scholar
  45. RICHTER R., U. SCHLIEPER and W. FRIEDMANN (1981), Makroökonomik, Eine Einführung, 4th ed., Berlin.Google Scholar
  46. SCHALK, H.J. (1984), Verbesserung der Globalsteuerung durch Berück-sichtigung ihrer strukturellen Auswirkungen. Eine empirische Untersuchung mit einem disaggregierten ökonometrischen Modell für die Bundesrepublik Deutschland, mimeo., Münster.Google Scholar
  47. SILBERBERG, E. (1978), The Structure of Economics. A Mathematical Analysis, New York.Google Scholar
  48. SINN, H.-W. (1983), Die Inflationsgewinne des Staates, in: E. Wille (ed.), Beiträge zur gesamtwirtschaftlichen Allokation: Allokationsprobleme im intermediären Bereich zwischen öffentlichem und privatem Wirtschaftssektor, Frankfurt/Main, pp. 111–166.Google Scholar
  49. SOLOW, R.M. (1975), The intelligent citizen’s guide to inflation, The Public Interest 38, 30–66.Google Scholar
  50. TATOM, J.A. (1976), The Welfare Cost of Inflation, Federal Reserve Bank of St. Louis, Review Nr. 11, Vol. 58 (November 1976), 9–22.Google Scholar
  51. TATOM, J.A. (1979), The Marginal Welfare Cost of the Revenue from Money Creation and ‘the’ Optimal Rate of Inflation, The Manchester School 47, 359–368.Google Scholar
  52. TOBIN, J. (1972), Inflation and Unemployment, American Economic Review 62, 1–18.Google Scholar
  53. TOWER, E. (1971), More on the Welfare Cost of Inflationary Finance, Journal of Money, Credit, and Banking 3, 850–860.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1986

Authors and Affiliations

  • Wolfgang Franz
    • 1
  1. 1.University of StuttgartGermany

Personalised recommendations