Commentary

Fischer's paper is the culmination of a series of important papers (one jointly with John Huizinga and one with Franco Modigliani) in which he enumerated the various costs of inflation and attempted a quantitative evaluation of these costs. We have learned a great deal from these papers. The enumeration included not only the obvious costs but also some less obvious and less easily quantified ones. It was surprising to see how many costs that we do not usually consider may rank in importance with the obvious ones. This list of costs of inflation must surely be welcome to poli-cymakers who need some guidance as to what is important and what isn't. This list is of course not the list that we would really have liked to have: a list of the relative costs and benefits of policies to deal with inflation. The whole reason for enumerating the costs of inflation is, apparently, to pro-vide some guidance to policymakers. But by providing this enumeration, Fischer is not solving any of the fundamental problems in macroeconomic theory. These fundamental problems concern the interpretation of the cor