Inflation Variability, Real-Wage Variability and Production Inefficiency

摘要: In recent years economists have paid considerable attention to the relation between rate of inflation and its temporal variance. The consensus emerging from this discussion is that there exists a strong positive (See for example, Okun, 1971; Gordon, Jaffe Kleiman, 1977; Foster, 1978.) Clearly, increased variability likely involve social costs concern inefficiency in consumption production. Thus, his Nobel lecture, Friedman (1977) says: "The growing volatility departure relative prices values market forces alone shall set, combine render econoniic system less efficient" (p. 470). general, interpretation given production resulting reduction output level lower than occurring under price stability. For Levi Makin interpret Friedman's argument thus: "From two components we high accompanied by ... will mean output" (Levi Makin, 1980, p. 1023). It our purpose paper elaborate on concept caused (IV), where focus real wage variability. We suggest relates average changes use labour output. Specifically, it shown IV alters and/or employment way inferior stable prices. That, suggest, crux IV. This emerge as result independently whether rises or falls Indeed, analysis illustrate may increase decrease, so that, using an index efficiency, obtain unlikely raises efficiency. One derive en route plausible assumptions about function, may, average, rise with Notwithstanding this, show efficiency declines. be used Friedman. "These developments clearly economic clear what their effect recorded unemployment. . ." (1977, 466). proceed considering basic model showing ambiguity Section I. II, introduces defined upon