Arbeitspapier
Inflation and welfare in long-run equilibrium with firm dynamics
We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the United States economy and the long-run equilibrium properties are compared at low and high inflation. We find that, when the period over which the cash-in-advance constraint is binding is one quarter, an annual inflation rate of 10 percent leads to a decrease in the steady-state average productivity of roughly 0.5 percent compared to the optimum's steady-state. This decrease in productivity is not innocuous: it leads to a doubling of the welfare cost of inflation.
- Sprache
-
Englisch
- Erschienen in
-
Series: IZA Discussion Papers ; No. 4559
- Klassifikation
-
Wirtschaft
Money and Interest Rates: General
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
Economic Growth and Aggregate Productivity: General
- Thema
-
Firm dynamics
productivity
inflation
welfare
Inflation
Unternehmensentwicklung
Produktivität
Markteintritt
Wohlfahrtseffekt
USA
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Janiak, Alexandre
Monteiro, Paulo Santos
- Ereignis
-
Veröffentlichung
- (wer)
-
Institute for the Study of Labor (IZA)
- (wo)
-
Bonn
- (wann)
-
2009
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
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Objekttyp
- Arbeitspapier
Beteiligte
- Janiak, Alexandre
- Monteiro, Paulo Santos
- Institute for the Study of Labor (IZA)
Entstanden
- 2009
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