Recently there has been renewed interest in using general equilibrium models to understand the effects of monetary policy on interest rates and real economic activity. This research effort involved the search for models that will account for the liquidity effects -- the decrease in short-term...

This paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions. Although individually none of the distortions is very large, they combine to yield substantial welfare cost estimates. A sustained 4% inflation like that experienced in the U.S....

This paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions. Although individually none of the distortions is very large, they combine to yield substantial welfare cost estimates. A sustained 4 percent inflation like that experienced in...