This paper examines the incidence and welfare costs of inflation in the presence of financial market frictions and home production. The results suggest that financing constraints on firms' working capital expenditures significantly increase the welfare costs relative to the standard...

This paper examines the welfare costs of inflation in the presence of financial market frictions. The results suggest that financing constraints on firms' working capital expenditures significantly increase the welfare costs relative to the standard Cooley-Hansen (1989) cash-in-advance...

This paper examines the incidence and welfare costs of inflation in the presence of financial market frictions and home production. The results suggest that financing constraints on firms' working capital expenditures significantly increase the welfare costs relative to the standard...

A great deal of recent research has pointed out the benefits of adopting inflation targets, emphasizing, in particular, their role in helping to stabilize inflation expectations. These arguments suggest that inflation expectations in countries that target inflation should react differently to...