The paper argues that Lucas overestimates the Friedman-Bailey type of welfare cost of inflation and neglects other … of Lucas? estimate. The neglected welfare effects of inflation include an adverse Baumol-Tobin effect on growth and … between inflation, relative prices and structural change …

In this paper I attempt to clarify the nature of the losses associated with inflation within a conventional model of a … competitive economy. I shall argue that were inflation fully anticipated, it would be "almost neutral" provided (a) that the tax … States). However, unanticipated inflation may have significant effects …

sustained inflation are small relative to the costs of unemployment. If a temporary reduction in unemployment causes a permanent … increase in inflation, the present value of the resulting future welfare costs may well exceed the temporary short-run gain …. Previous analyses have underestimated the cost of a permanent increase in the inflation rate because they have ignored the …

banking sector. Taking these effects into account, a one percentage point increase in inflation has a welfare cost of 0 …