On the Timing of Production Decisions in Monetary Economies

26 Pages Posted: 20 Feb 2019

See all articles by Nejat Anbarci

Nejat Anbarci

Deakin University - Department of Economics

Richard Dutu

University of Waikato

Ching‐Jen Sun

Deakin University

Date Written: February 2019

Abstract

In most macroeconomic models inflation tends to be harmful. In this article, 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.

Suggested Citation

Anbarci, Nejat and Dutu, Richard and Sun, Ching‐Jen, On the Timing of Production Decisions in Monetary Economies (February 2019). International Economic Review, Vol. 60, Issue 1, pp. 447-472, 2019. Available at SSRN: https://ssrn.com/abstract=3335312 or http://dx.doi.org/10.1111/iere.12359

Nejat Anbarci (Contact Author)

Deakin University - Department of Economics ( email )

70 Elgar road
Burwood, Victoria 3215
Australia

HOME PAGE: http://www.deakin.edu.au/~nejata/

Richard Dutu

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Ching‐Jen Sun

Deakin University

75 Pigdons Road
Victoria, 3216
Australia

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