*Associate Professor of Economics, University of Kentucky. Comments by Laurence Ball, Robert Barsky, Martin Evans, James Fackler, Daniel Thornton, Thomas Willett, anonymous referees, and the participants in the Macroeconomics Workshops at the University of Kentucky and the University of Michigan are gratefully acknowledged. The research was supported by a Special Summer Faculty Reseamh Fellowship from the Graduate School of the University of Kentucky. Part of the research was done while the author was on leave at the University of Michigan Business School.
UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY
Article first published online: 28 SEP 2007
Volume 31, Issue 1, pages 39–51, January 1993
How to Cite
HOLLAND, A. S. (1993), UNCERTAIN EFFECTS OF MONEY AND THE LINK BETWEEN THE INFLATION RATE AND INFLATION UNCERTAINTY. Economic Inquiry, 31: 39–51. doi: 10.1111/j.1465-7295.1993.tb00864.x
- Issue published online: 28 SEP 2007
- Article first published online: 28 SEP 2007
In the postwar period high rates of inflation are associated with high levels of inflation uncertainty. In this paper I argue that the inflation rate and inflation uncertainty are linked by forecasters' uncertainty about the impact of money growth on the price level, and I present evidence indicating that this has been the case. As long as the impact of money growth on the price level remains unpredictable, then even predictable money growth will cause inflation uncertainty with its accompanying adverse effects on employment and output.