dispersion reduces welfare by creating mismatch between posted prices and money balances. Inflation exacerbates this welfare loss …

the cost of inflation. Our model features a strategic complementarity between the buyers' ex ante choice of money balances … inefficient and welfare-ranked. Effects of inflation are highly nonlinear. When inflation is high, the buyer's money holdings bind …, and inflation therefore reduces trade through a standard real-balance channel. When inflation is low, the seller …

We argue that long-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. Using … anticipated inflation and unemployment. Second, there is also a positive correlation between anticipated inflation and … unemployment volatility. Third, the long-run inflation-unemployment relationship is not only positive, but also stronger when …

patterns in economic activity and inflation following oil price shocks in the euro area. In the 'normal regime', oil price … shocks are followed by sizeable and sustained macroeconomic fluctuations, with inflation and economic activity moving in the … same direction as the oil price. The responses of inflation expectations and wage growth point to second-round effects as a …

that the oil price passes through core inflation only via its effect on the whole economy. This pass-through is estimated …

inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint …, we show that an inflation bias as well as a deflationary bias exist as a steady-state outcome. We assess the predictions … of this model using unique individual-level inflation expectations data across nine countries that allow for a direct …