STOCHASTIC INFLATION AND THE OPTIMAL POLICY OF PRICE ADJUSTMENT

LEIF DANZIGER

doi:10.1111/j.1465-7295.1984.tb00669.x

STOCHASTIC INFLATION AND THE OPTIMAL POLICY OF PRICE ADJUSTMENT

LEIF DANZIGER

Department of Economics

Research output: Contribution to journal › Article › peer-review

17 Scopus citations

Abstract

This paper analyzes the optimal policy of price adjustment for a monopolistic firm in the presence of stochastic inflation. It shows that an increase in the expected rate of inflation or in the cost of price adjustment leads to an increase in the initial real price and a decrease in the terminal real price in each period with a fixed nominal price. It also shows that the effects of increased riskiness of inflation are ambiguous.

Original language	English
Pages (from-to)	98-108
Number of pages	11
Journal	Economic Inquiry
Volume	22
Issue number	1
DOIs	https://doi.org/10.1111/j.1465-7295.1984.tb00669.x
State	Published - 1 Jan 1984

ASJC Scopus subject areas

General Business, Management and Accounting
Economics and Econometrics

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Cite this

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abstract = "This paper analyzes the optimal policy of price adjustment for a monopolistic firm in the presence of stochastic inflation. It shows that an increase in the expected rate of inflation or in the cost of price adjustment leads to an increase in the initial real price and a decrease in the terminal real price in each period with a fixed nominal price. It also shows that the effects of increased riskiness of inflation are ambiguous.",

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STOCHASTIC INFLATION AND THE OPTIMAL POLICY OF PRICE ADJUSTMENT

Abstract

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