The welfare costs of expected and unexpected inflation

Autor:	Miquel Faig, Zhe Li
Rok vydání:	2009
Předmět:	Inflation Macroeconomics Economics and Econometrics media_common.quotation_subject Perfect information Monetary economics Inflation tax Wright Search model Great Depression Economics Welfare Finance media_common
Zdroj:	Journal of Monetary Economics. 56:1004-1013
ISSN:	0304-3932
DOI:	10.1016/j.jmoneco.2009.09.005
Popis:	The monetary search model by Lagos and Wright (2005) is extended with imperfect information about nominal shocks as in Lucas (1972). An analytical solution exists with logarithmic preferences. In general, individuals hold precautionary balances. Calibrated to United States postwar data, the welfare cost of the monetary cycle is calculated to be small (below 0.0003% of GDP) compared to the welfare cost of the inflation tax (around 0.25% of GDP). The main reason for the minute welfare cost of the monetary cycle is its low amplitude in 1947–2007. But, monetary crashes, such as those experienced during the Great Depression, can generate important welfare costs.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::df3bd405877c7c0127606175c9ae3a00 https://doi.org/10.1016/j.jmoneco.2009.09.005 Zobrazit plný text záznamu Full Text from ScienceDirect