This inflation risk premium implies that in an economy with high inflation, less investment projects with a rather high rate of return will be profitable. In such circumstances, capital accumulation will be lower than it could have been in a situation of price stability and the output growth rate is consequently reduced.
“Is Slow Productivity and Output Growth in Advanced Economies the New Normal?” International Productivity Monitor, vol. 35 (Fall), pp. 138–48. - 16 Fuhrer, Jeff, Giovanni P. Olivei, Eric S. Rosengren, and Geoffrey M.B. Tootell (2018). “Should the Federal Reserve Regularly Evaluate Its Monetary Policy Framework?” Brookings Papers on Economic Activity, Fall, pp. 443–97, https://www.brookings.edu/wp-content/uploads/2018/09/Fuhrer-et-al_Text.pdf. Goodfriend, Marvin (2007).