Inflation, expectations, and output: Lucas's islands revisited

Article Abstract:

The underlying assumptions used in deriving Lucas' natural rate hypothesis is shown to be debatable and that changing the assumption essentially revises the model presented by Lucas. Lucas' assumptions lead to the hypothesis that unexpected inflation influences output and that expected inflation has little effect. Contracting literature based on the hypothesis renders the policy impotence results in New Classical Macro impossible to defend.

Economics, Research and Development in the Social Sciences and Humanities, Models, Macroeconomics

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A simple pecuniary model of money and growth with transactions cost

Article Abstract:

A monetary endogenous growth model is developed to assess the impact of anticipated inflation on per capita real variables and economic welfare. The model considers endogenous labor-leisure trade-off, specifies the functional forms of leisure disutility and provides comparative static results of responses to anticipated inflation. It is shown that contrary to existing studies, increased welfare costs result from reduced output growth.

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Inflation and the asymmetric effects of money on output fluctuations

Article Abstract:

The work of Ball and Mankiw (BM) is applied to the study of postwar US data and tests the implications of the BM's model of asymmetric price adjustment that monetary shocks have asymmetric effects on output. An econometric analysis of Cover's approach is conducted, which allows the construction of a model on the asymmetric effects of positive and negative money-supply shocks.

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