Erratic monetary policy and price variability |
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Authors: | Thomas F Cosimano |
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Institution: | Texas A&M University, USA |
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Abstract: | This paper examines the effect of erratic monetary policy on individual behavior, as well as the aggregate economy. It is demonstrated that an increase in erratic monetary policy causes an increase in demand for inventories by individuals. This behavior by individuals in turn leads to a higher variability of the price level, as well as a higher price level in the steady state of the aggregate economy. |
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