On the Timing of Production Decisions in Monetary Economies

Anbarci, Nejat and Dutu, Richard and Sun, Ching-jen (2016): On the Timing of Production Decisions in Monetary Economies.

Abstract

In most macroeconomic models inflation tends to be harmful. In this paper we show that by simply changing the timing of production decisions by firms from “on demand” to “in advance”, some inflation can boost welfare as long as goods are sufficiently perishable. The main conclusion from this research is that by effectively hiding the strategic interaction between supply and demand, assuming production on demand is not without loss of generality.

• Item Type: MPRA Paper
• Language: English
• Keywords: Timing, Perishability, Production, Money, Inflation, Search.
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; D - Microeconomics > D2 - Production and Organizations; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates

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