The impact of inflation on US productivity and international competitiveness. [Monograph]. CIR Report No. 8; NPA Report No. 182
The study argues that inflation affects productivity and competitiveness in three basic ways. First, the business environment becomes more uncertain as inflation accelerates and, consequently, there tends to be less investment and innovation than otherwise. Second, inflation increases effective tax rates, adversely affecting the incentives to save, to invest and to work. Third, and most direct, inflation raises the prices of US goods in international markets. This may be offset by exchange-rate changes, although, as has happened, the Federal Reserve Board may raise interest rates and this can prevent the exchange rate from falling. The authors conclude that much could be done by reforming the tax codes for private individuals and for corporations to reduce the detrimental effects of inflation. This is not to say that bringing inflation under control should not remain a very high priority for this and subsequent administrations to address. But, as the authors note, some of the reforoted.
- OSTI ID:
- 6236010
- Country of Publication:
- United States
- Language:
- English
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