We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of … establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the … United States economy and the long-run equilibrium properties are compared at low and high inflation. We find that, when the …

hyperbolic discounting leads to inflation having significant long-run effects on real variables. …

We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of … establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the … United States economy and the long-run equilibrium properties are compared at low and high inflation. We find that, when the …

Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations. …

Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations. …

contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high … incomes experience guilt. The former seek to raise their income, and latter seek to reduce it. The greater the inflation rate …, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant …

contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high … incomes experience guilt. The former seek to raise their income, and latter seek to reduce it. The greater the inflation rate …, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …