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 …

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 …