The paper presents the welfare cost of inflation in a banking time economy that models exchange credit through a bank … welfare cost of a 10% inflation rate instead of zero, for comparison to other estimates, as well as the cost of a 2% inflation … rate instead of a zero inflation rate. The zero rate is specified as the US inflation rate target in the 1978 Employment …

aggregate demand gains momentum. If inflation also has inertia, the central bank still overheats the economy during the low …

by the announcement of inflation targeting in 1991 when estimating the effects of monetary policy. For instance, we find … that a 100-basis-point increase in our new shock series leads to a 1.0 per cent decrease in real GDP and a 0.4 per cent … fall in the price level, while not accounting for the break leads to a permanent decrease in real GDP and a price puzzle …