Wen, 文一 - Federal Reserve Bank of St. Louis - 2014
monetary theory, such as the welfare cost of inflation. It is shown that when money is a vital form of liquidity to meet … uncertain consumption needs, the welfare costs of inflation can be extremely large. With log utility and parameter values that …, agents in our model are willing to reduce consumption by 3% ~ 4% to avoid 10% annual inflation. The astonishingly large …