We develop a general equilibrium framework to analyze the relationship between the operation of the financial system, inflation and economic growth. We first investigate the dynamic interactions between financial development and growth by analyzing how financial innovations affect real growth, and, in turn, growth affects the financial system. We then study how inflation affects financial deepe...

We consider constraints on inflation driven by a single, minimally coupled scalar field in the light of the WMAP5 dataset, as well as ACBAR and the SuperNova Legacy Survey. We use the Slow Roll Reconstruction algorithm to derive optimal constraints on the inflationary parameter space. The scale dependence in the slope of the scalar spectrum permitted by WMAP5 is large enough to lead to viable m...

Empirical evidence suggests that the instrument rule describing the interest rate setting behavior of the Federal Reserve is non-linear. This paper shows that optimal monetary policy under parameter uncertainty can motivate this pattern. If the central bank is uncertain about the slope of the Phillips curve and follows a min-max strategy to formulate policy, the interest rate reacts more strong...

Studies of inflation targeting make the distinction between strict and flexible inflation targeting. The problem of strict inflation targeting has so far been analysed by treating it as a special case of a standard optimal control problem and the algorithms used have not provided an exact solution. This paper presents a formal solution to the problem of strict inflation targeting in a economy w...

In the United States, there is an ongoing debate about the possible adoption of an explicit numerical inflation target for the Federal Reserve. An important facet of this debate regards what numerical value such a target should have. Bernanke et al. (1999, p. 28-30) discuss four reasons why an inflation targeting central bank should target a positive inflation rate: 1) CPI-based measures of inf...

Demand for a seasonal product persists for a fixed period of time. Normally the “finite time horizon inventory control problems” are formulated for this type of demands. In reality, it is difficult to predict the end of a season precisely. It is thus represented as an uncertain variable and known as random planning horizon. In this paper, we present a production-inventory model for deterioratin...

A number of recent papers have explored monetary policy options, including inflation targeting and inflation forecast targeting (notably Svensson (1999a, 1999b, 2000)) and price level targeting (Wolman 2000, Batini and Yates 1999, Blinder 1999). Most papers explore “optimal” monetary policy in the context of a single model. However, a number of conclusions made in the literature depend strongly...

Here we investigate the existence of credit in a cash-in-advance economy where there are complete markets but for the fact that agents cannot commit to repay their debts. Defectors are banned from the credit market but they can use money balances for saving purposes. Without uncertainty, deflation crowds out credit completely. The equilibrium allocation, however, is efficient if the government ...

Original scientific paper Non production of defective parts during production operations and non-attention to inflation and time value of money are among the hypotheses of economic production quantity model. But the performed studies show that considering defective parts in production size determination models or including the subject of inflation and time value of money in them leads to the ch...

Problem statement: In most of the earlier inventory models, effect of inflation has been ignored, which is playing pilot role in present environment. In this article, we have proposed an economic order quantity model for deteriorating items having stock dependent demand (whose demand varies with the stock) under the effect of inflation. Approach: Firstly, problem is framed in the form of linear...