On the welfare and cyclical implications of moderate trend inflation

• 成果类型: Article
• 署名作者: Ascari, Guido; Phaneuf, Louis; Sims, Eric R.
• 署名单位: University of Oxford; University of Pavia; University of Quebec; University of Quebec Montreal; University of Notre Dame; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2018.06.001
• 发表日期: 2018
• 页码: 56-71
• 关键词: Trend inflation; Roundabout production; Investment shocks; Inflation costs; business cycles

摘要

The welfare and cyclical implications of moderate trend inflation are addressed in an augmented medium-scale DSGE model. Increasing trend inflation from 2 to 4 percent generates a consumption-equivalent welfare loss of about 4 percent. Welfare costs of this magnitude are driven by: staggered wage contracts, trend growth, extended borrowing, a roundabout production structure, and the interaction between trend inflation and shocks to the marginal efficiency of investment (MEI). A sticky-price model abstracting from these features generates much smaller losses. Moderate trend inflation also has important business-cycle implications, interacting much more strongly with MEI shocks than with productivity or monetary shocks. (C) 2018 Elsevier B.V. All rights reserved.