Our major conclusions are as follows: (1) If inflation rates remain high, then the yield curve will tend to slope upward more steeply than in the past (or slope downward less steeply when the yield curve is inverted). (2) This yield curve situation will lead firms to shorten the average maturities of their liabilities, even though this will expose them to greater risks of earnings fluctuations ...

The paper extends the literature on financial development, inflation, and growth by using the idea that both the rates of return on physical and human capital affect growth. This leads to the introduction of the investment rate into the model, as a proxy for the return to physical capital, along with the inflation rate as a variable affecting the return to human capital. As a result financial d...

Has the macroeconomic policy "regime" changed in the United States in the last few years? If so, has t h s change had an effect on macroeconomic relationships, and, in particular, on the relationshp between inflation and unemployment? These two questions have been on the minds of most macroeconomists since the October 1979 switch from interest rates to reserves as an intermediate target for the...

Inflationary cosmologies, regarded as dynamical systems, have rather simple asymptotic behavior, insofar as the cosmic baldness principle holds. Nevertheless, in the early stages of an inflationary process, the dynamical behavior may be very complex. In this paper, we show how even a simple inflationary scenario, based on Linde’s “chaotic inflation” proposal, manifests nontrivial dynamical effe...

We study the low frequency comovements in unemployment, inflation and the federal funds rate in the U.S. From 1970 through 1979 all three series trended up together; after 1979 they all trended down. The conventional explanation for the buildup of inflation in the 1970s is that the Fed reacted to an increase in the natural rate of unemployment by conducting an overly passive monetary policy. We...