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On the timing of production decisions in monetary economies

journal contribution
posted on 01.02.2019, 00:00 authored by Nejat AnbarciNejat Anbarci, R Dutu, Ching-Jen SunChing-Jen Sun
In most macroeconomic models inflation tends to be harmful. In this article, we show that by simply changing the timing of production decisions by firms from “on demand” to “in advance,” some inflation can boost welfare as long as goods are sufficiently perishable. The main conclusion from this research is that by effectively hiding the strategic interaction between supply and demand, assuming production on demand is not without loss of generality.

History

Journal

International economic review

Volume

60

Issue

1

Pagination

447 - 472

Publisher

Wiley

Location

Chichester, Eng.

ISSN

0020-6598

eISSN

1468-2354

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2018, Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association