interaction affects the allocation and welfare. Regarding how banking affects the welfare costs of inflation: First, we find that …, with banking, inflation generates smaller welfare costs. Second, we show that, lowering inflation improves welfare not just … nature of intermediation cost is critical for accurately assessing the welfare gain of lowering the inflation target …

This paper studies the welfare costs and the redistributive effects of inflation in the presence of idiosyncratic … money demand and the distribution of money holdings across households, and study the effects of inflation under the implied … inflation are on average 40% smaller compared to a complete markets, representative agent economy, and that inflation induces …

This paper studies the long run welfare costs of inflation in a micro-founded model with trading frictions and costly … 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 income for the U.S. economy and 0.20% of income for the …

. Finally, the effectiveness of monetary shocks depends on the steady-state level of inflation. The higher the average level of … inflation (money growth), the bigger the impact effect of a shock of a given size but the smaller its cumulative effect. These …

We develop an experimental framework to investigate the quantity theory of money and the real effects of inflation in … an economy where money serves as a medium of exchange. We test the classical view that inflation reduces output and … welfare by taxing monetary exchange. Inflation is engineered by constant money growth. We conduct three treatments, where the …

long run. In particular, we show that if monetary policy reacts aggressively to inflation, this supports a steady state … where inflation is close to the central bank's target. However, the same aggressive policy simultaneously favours the … inflation are lower and monetary policy is constrained by the effective lower bound. We discuss how fiscal policy can be used to …

This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied …, Changes in government expenditure account for a substantial portion of inflation variations and provide new insights into the … "missing disinflation" puzzle, We also find that inflation and inflation expectations respond negatively to fiscal spending …

-zero trend inflation. We characterize the fiscal and monetary policies by a rule whereby a given fraction k of the government … measured by (1 k), is positively related to trend inflation, and 2) when prices are sticky, k has significant effects on the … degrees of fiscal dominance. -- Economic models ; Fiscal policy ; Inflation: costs and benefits ; Monetary policy framework …

Since the work of Doepke and Schneider (2006a) and Meh and Terajima (2008), we know that inflation causes major … same country. Two types of monetary policy, inflation targeting (IT) and price level targeting (PT), have very different … ; Inflation: costs and benefits ; Inflation targets ; Inflation and prices …