Inflation and efficiency in a search economy

Chaim Fershtman; Arthur Fishman; Avi Simhon

doi:10.1111/1468-2354.t01-1-00067

Inflation and efficiency in a search economy

Chaim Fershtman, Arthur Fishman, Avi Simhon^*

^*Corresponding author for this work

Department of Environmental Economics and Management

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

1 Scopus citations

Abstract

We present a model in which purely monetary inflation systematically affects efficiency, welfare, and relative prices. The model focuses on the microeconomics of trade in search markets under inflation. Inflation, by increasing the cost of holding money, undermines the market's ability to sustain long-term customer relationships. Because those relationships generate the most efficient transactions patterns, overall welfare unambiguously declines.

Original language	American English
Pages (from-to)	205-222
Number of pages	18
Journal	International Economic Review
Volume	44
Issue number	1
DOIs	https://doi.org/10.1111/1468-2354.t01-1-00067
State	Published - Feb 2003

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Inflation and efficiency in a search economy

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