Heterogeneous inflationary expectations, Fisher's theory of interest and the allocative efficiency of the bond market

Alex Cukierman

doi:10.1016/0165-1765(78)90052-6

Heterogeneous inflationary expectations, Fisher's theory of interest and the allocative efficiency of the bond market

Alex Cukierman^*

^*Corresponding author for this work

School of Economics

Carnegie Mellon University

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

This letter considers the consequences of heterogeneous inflationary expectations for Fisher's theory of interest. It is further shown that divergent and erroneous expectations cause welfare losses which increase when either the variance of expectations or of actualinflation increase.

Original language	English
Pages (from-to)	151-155
Number of pages	5
Journal	Economics Letters
Volume	1
Issue number	2
DOIs	https://doi.org/10.1016/0165-1765(78)90052-6
State	Published - 1978

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abstract = "This letter considers the consequences of heterogeneous inflationary expectations for Fisher's theory of interest. It is further shown that divergent and erroneous expectations cause welfare losses which increase when either the variance of expectations or of actualinflation increase.",

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Heterogeneous inflationary expectations, Fisher's theory of interest and the allocative efficiency of the bond market

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