Liquidity, redistribution, and the welfare cost of inflation

• 成果类型: Article
• 署名作者: Chiu, Jonathan; Molico, Miguel
• 署名单位: Bank of Canada
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2010.03.004
• 发表日期: 2010
• 页码: 428-438
• 关键词: inflation; monetary policy; search; welfare

摘要

The long-run welfare costs of inflation are studied in a micro-founded model with trading frictions and costly liquidity management. By modelling the liquidity management decision, the model endogenizes the responses of velocity, output, the degree of market segmentation, and the distribution of money. Compared to the traditional estimates based on a representative agent model, the welfare costs of inflation are significantly smaller due to distributional effects of inflation. The welfare cost of increasing inflation from 0% to 10% is 0.62% of consumption for the US economy. Furthermore, the welfare cost is generally non-linear in the inflation rate. Crown Copyright (C) 2010 Published by Elsevier B.V. All rights reserved.