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Journal Article
What has become of the \\"stability-through-inflation\\" argument?
In this article, James B. Bullard and Alvin L. Marty begin by summarizing some popular arguments for positive steady-state rates of inflation based on the idea that a certain amount of inflation stabilizes economic performance. Then, synthesizing a number of disparate results in a single framework and using a general class of money-demand functions, they find that the stability-through-inflation arguments have either been completely replaced (by potent but unsettling results based on rational expectations) or called into question (by more sophisticated treatments of the adaptive expectations ...
Journal Article
Is there a case for \\"moderate\\" inflation?
Journal Article
The welfare cost of inflation: a critique of Bailey and Lucas
Estimating the welfare gains from ending inflation requires taking a stand on the shape of the money demand function. A form of the money demand function that seems to describe U.S. experience - known in technical jargon as the double log form - seems to work well in countries and times where inflation was moderate. In this article, Alvin Marty argues that the double log form would not likely work well in extreme cases, where policy was set to achieve Milton Friedman's optimal money stock, or at the other extreme, hyperinflation. The author concludes that this simple functional form should ...