search query: @indexterm WELFARE ECONOMICS / total: 236
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Author: | Ball, L. Romer, D. |
Title: | Inflation and the informativeness of prices |
Journal: | Journal of Money, Credit and Banking
2003 : APR, VOL. 35:2, p. 177-196 |
Index terms: | Inflation Information Prices Welfare economics |
Language: | eng |
Abstract: | The welfare effects of the relative-price variability arising from inflation are studied in this paper. Prices have an informational role if customers and suppliers form long-term relationships; a potential customer uses current prices as signals of future prices. Inflation reduces the informativeness of current prices, causing customers to make costly mistakes about which relationships to enter. |
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