Abstract
This dissertation examines two interrelated aspects of the problem of inflation uncertainty. The first is an examination of the cause for a, positive relationship between expected inflation and the uncertainty of inflation. The second is the identification of the welfare effects of inflation uncertainty. In regards to the first, it is shown that there is a fundamental reason for the existence of positive relationship between expected inflation and inflation uncertainty. This is due to what is termed the amplification effects. These amplification effects are present when either there is real uncertainty in the economy, or when monetary policy is uncertain. In regards to the second, the welfare effects of inflation uncertainty are examined in a model where money is valued for its liquidity services. Another important feature of this model is the presence of a substitute for money in providing liquidity services. In other general equilibrium models of money it has been difficult to identify any negative welfare effects of inflation uncertainty. In fact, some have argued that inflation uncertainty may actually be welfare improving. The model presented in the dissertation finds significant welfare effects of inflation uncertainty.
Powers, Dennis Edward (1995). On the causes and effects of inflation uncertainty. Texas A&M University. Texas A&M University. Libraries. Available electronically from
https : / /hdl .handle .net /1969 .1 /DISSERTATIONS -1575793.