The welfare cost of inflation with banking time

Arbeitspapier

The paper presents the welfare cost of inflation in a banking time economy that models exchange credit through a bank production approach. The estimate of welfare cost uses fundamental parameters of utility and production technologies. It is compared to a cash-only economy, and a Lucas (2000) shopping economy without leisure, as special cases. The paper estimates the welfare cost of a 10% inflation rate instead of zero, for comparison to other estimates, as well as the cost of a 2% inflation rate instead of a zero inflation rate. The zero rate is specified as the US inflation rate target in the 1978 Employment Act amendments. The paper provides a conservative welfare cost estimate of 2% inflation instead of zero at $33 billion a year. Estimates of the percent of government expenditure that can be financed through a 2% vs. zero inflation rate are also provided.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IEHAS Discussion Papers ; No. MT-DP - 2018/31

Klassifikation und Themen

• Klassifikation: Wirtschaft ; General Aggregative Models: Neoclassical ; Price Level; Inflation; Deflation ; Interest Rates: Determination, Term Structure, and Effects ; Monetary Policy
• Thema: Euler equation ; interest rates ; inflation ; banking ; money demand ; velocity ; price-theoretic ; marginal cost ; productivity shocks ; Great Recession

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Gillman, Max
• Ereignis: Veröffentlichung
• (wer): Hungarian Academy of Sciences, Institute of Economics
• (wo): Budapest
• (wann): 2018

Weitere Informationen

• Handle: http://hdl.handle.net/10419/222044
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ