Date of Original Version

9-1996

Type

Article

Abstract or Description

The goal should be zero inflation, on average, to protect the purchasing power of money. Uncertainty about inflation raises both real and nominal interest rates, hinders long-term investment and planning for retirement. Maintaining zero inflation forces business to control costs, thereby encouraging productivity improvements. Uncertainty about future purchasing power is particularly costly for the timid, cautious, and poorly informed.

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Published In

International Economy, 10, 5.