Many sticky-price models suggest that relative price distortion is one of the major costs of inflation. We show that … this resource misallocation is costly even at quite low rates of inflation. This is because inflation strongly affects … has a persistent, negative hump-shaped impact on inflation, but may have a positive hump-shaped impact on output. Observed …

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 …