Using U.S. cross-sectional data, this paper calculates the welfare cost of a 10% inflation for different individuals … consumption in order to have inflation reduced from 10% to 0. In absolute terms this represents a cost of 2.687% of consumption … advantage of using this model. Hence, inflation in this framework, as other studies have shown, acts as a regressive consumption …

Recent work on money and endogenous growth finds modest welfare costs of inflation. Furthermore, high inflation reduces … rate of inflation depending on the elasticity of labor supply. Considering the transition dynamics following a change in … the monetary policy, the optimal quarterly inflation rate is found to amount to approximately 3.5% in the benchmark case …

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 …