Inflation, Tax Rules, and Capital Formation
Inflation, Tax Rules, and Capital Formation

Author: Martin Feldstein

Publisher: University of Chicago Press

Published: 2009-05-15

Total Pages: 312

ISBN-13: 0226241793

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Inflation, Tax Rules, and Capital Formation brings together fourteen papers that show the importance of the interaction between tax rules and monetary policy. Based on theoretical and empirical research, these papers emphasize the importance of including explicit specifications of the tax system in such study.

Inflation, Tax Rules and the Accumulation of Residential and Nonresidential Capital
Inflation, Tax Rules and the Accumulation of Residential and Nonresidential Capital

Author: Martin S. Feldstein

Publisher:

Published: 1981

Total Pages: 44

ISBN-13:

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The present paper analyses the effect of the interaction between tax rules and inflation on the size and allocation of the capital stock with particular emphasis on the role of owner-occupied housing. The analysis is developed in the framework of an economy that is in equilibrium and in which a constant fraction of disposable income is saved. In this model, I show that, with current U.S. tax laws, an increase in the rate of inflation reduces the equilibrium amount of business capital employed in the economy and raises the amount of housing capital. The analysis also shows that a higher rate of inflation lowers the real net-of-tax rate of return to the provider of business capital. In a richer model than the current one, i.e., in a model in which the rate of personal saving was an increasing function of the net rate of return, a higher inflation rate would therefore lower the rate of saving. The present analysis also shows that permitting firms to depreciate investments more rapidly for tax purposes increases the accumulations of business capital but that, unless firms are permitted to expense all in- vestment immediately, an increase in in£ lat ion continues to depress the accumulation of business capital.

Inflation Expectations
Inflation Expectations

Author: Peter J. N. Sinclair

Publisher: Routledge

Published: 2009-12-16

Total Pages: 402

ISBN-13: 1135179778

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Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Money, Inflation, and Capital Formation
Money, Inflation, and Capital Formation

Author: Leopold von Thadden

Publisher: Springer Science & Business Media

Published: 2012-12-06

Total Pages: 203

ISBN-13: 3642585566

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This book is a slightly revised version of my doctoral thesis which I wrote during my time as an assistant at the Faculty of Economics of the University of Magdeburg. I am grateful that I had the opportunity to write my the sis in the stimulating atmosphere of this young and lively faculty. lowe a great amount of gratitude to my supervisor Prof. G. Schwodiauer who con stantly encouraged my work and helped to improve it in many discussions. I also would like to thank Prof. K-H. Paque and Prof. P. Flaschel who, as members of my doctoral committee, commented on various details of this study in a very constructive manner. At various stages of my work I received helpful comments from many colleagues of mine, in particular T. Konig and A. Wohrmann. However, it goes without saying that I retain full responsi bility for all remaining errors. Contents Introduction 1 I Money, inflation, and capital formation in the long run: general remarks 5 1 Summary of the literature: theoretical aspects 7 2 Summary of the literature: empirical aspects 19 3 Further reflections on money 29 II Money, inflation, and capital formation: the perspective of overlapping generations models 43 4 The Diamond model with money as single outside asset 45 4. 1 The model. . . . . . . . 46 4. 2 Equilibrium conditions. 51 4. 3 Policy effects 58 4. 4 Discussion. 61 4. 5 Appendix . 63 5 Variation 1: Imperfect credit markets and asymmetric information 65 5. 1 The model. . . . . . . .

The Costs and Benefits of Price Stability
The Costs and Benefits of Price Stability

Author: Martin Feldstein

Publisher: University of Chicago Press

Published: 2007-12-01

Total Pages: 374

ISBN-13: 0226241769

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In recent years, the Federal Reserve and central banks worldwide have enjoyed remarkable success in their battle against inflation. The challenge now confronting the Fed and its counterparts is how to proceed in this newly benign economic environment: Should monetary policy seek to maintain a rate of low-level inflation or eliminate inflation altogether in an effort to attain full price stability? In a seminal article published in 1997, Martin Feldstein developed a framework for calculating the gains in economic welfare that might result from a move from a low level of inflation to full price stability. The present volume extends that analysis, focusing on the likely costs and benefits of achieving price stability not only in the United States, but in Germany, Spain, and the United Kingdom as well. The results show that even small changes in already low inflation rates can have a substantial impact on the economic performance of different countries, and that variations in national tax rules can affect the level of gain from disinflation.