Inflation and efficiency in a search economy

Chaim Fershtman, Arthur Fishman, Avi Simhon

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


We present a model in which purely monetary inflation systematically affects efficiency, welfare, and relative prices. The model focuses on the microeconomics of trade in search markets under inflation. Inflation, by increasing the cost of holding money, undermines the market's ability to sustain long-term customer relationships. Because those relationships generate the most efficient transactions patterns, overall welfare unambiguously declines.

Original languageEnglish
Pages (from-to)205-222
Number of pages18
JournalInternational Economic Review
Issue number1
StatePublished - Feb 2003


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