Inflation and Welfare in an OLG Economy with a Privately Provided Public Good

24 Pages Posted: 7 Jul 2001

See all articles by Sergio Currarini

Sergio Currarini

University of Leicester - Department of Economics; Ca Foscari University of Venice - Dipartimento di Economia

Gaetano Bloise

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Nicholas Kikidis

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: January 2001

Abstract

In this paper we study the welfare effects of monetary policy in a simple overlapping generation economy in which agents voluntarily contribute to a public good. Inflation has two effects at equilibrium: it increases voluntary contributions and it misallocates private consumption across time. We show that the aggregate effect is welfare-improving for not too large inflation rates. Moreover, there exists an optimal inflation rate.

Keywords: Optimal inflation, public goods, voluntary contributions

JEL Classification: H41, E52, D91

Suggested Citation

Currarini, Sergio and Bloise, Gaetano and Kikidis, Nicholas, Inflation and Welfare in an OLG Economy with a Privately Provided Public Good (January 2001). FEEM Working Paper No. 12.2001, Available at SSRN: https://ssrn.com/abstract=275129 or http://dx.doi.org/10.2139/ssrn.275129

Sergio Currarini (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Gaetano Bloise

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
1348 Louvain-la-Neuve, 1348
Belgium
+32 10 47 4328 (Phone)
+32 10 47 4301 (Fax)

Nicholas Kikidis

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

34 Voie du Roman Pays
1348 Louvain-la-Neuve, 1348
Belgium

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