Inflation, Welfare, and Public Goods |
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Authors: | Gaetano Bloise Sergio Currarini & Nicholas Kikidis |
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Institution: | CORE,;University of Venice |
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Abstract: | In this article we study the welfare effects of monetary policy in a simple overlapping generation economy in which agents voluntarily contribute to a public good. Inflation has two effects at equilibrium: it increases voluntary contributions and it misallocates private consumption across time. We show that the aggregate effect is welfare-improving for "not too large" inflation rates. Moreover, there exists an optimal inflation rate. |
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