On the general equilibrium costs of perfectly anticipated inflation
Nenhuma Miniatura Disponível
Data
2009
Orientador(res)
Métricas
Título da Revista
ISSN da Revista
Título de Volume
Resumo
In monetary models where M0 has no social costs and a positive demand for cash and deposits is taken as a primitive, we show that the compensating variation in endowment is the exact general equilibrium measure of welfare costs of perfectly anticipated inflation. As a consequence, we show that a good approximation to the welfare costs of inflation is given by the area under the compensated demand for M0, a result that brings us back to Bailey (J Polit Econ 64:93-110, 1956). The estimated welfare costs of inflation are bounded at less than a quarter of a percent of the GDP for the U.S. economy. © Springer-Verlag 2008.