NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

On the Almost Neutrality of Inflation: Notes on Taxation and the Welfare Costs of Inflation

Joseph E. Stiglitz

NBER Working Paper No. 499 (Also Reprint No. r0220)
Issued in July 1980
NBER Program(s):Public Economics

In this paper I attempt to clarify the nature of the losses associated with inflation within a conventional model of a competitive economy. I shall argue that were inflation fully anticipated, it would be "almost neutral" provided (a) that the tax system were fully indexed and (b) that interest were paid on bank deposits (as to an increasing extent it is in the United States). However, unanticipated inflation may have significant effects.

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Document Object Identifier (DOI): 10.3386/w0499

Published: Stiglitz, Joseph E. "On the Almost Neutrality of Inflation: Notes on Taxation and the Welfare Costs of Inflation." Development in an Inflationary World, edited by M. June Flanders and Assaf Razin, pp. 419-457. New York: Academic Press, Inc., 1981.

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