The Welfare Cost of Inflation in Generalized General Equilibrium Models PDF Download
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Author: Lian Wang
Publisher:
ISBN: 9780542603556
Category : Electronic dissertations
Languages : en
Pages : 450
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Book Description
Author: Lian Wang
Publisher:
ISBN: 9780542603556
Category : Electronic dissertations
Languages : en
Pages : 450
Get Book Here
Book Description
Author: Lian Wang
Publisher: VDM Publishing
ISBN: 9783836455251
Category : Business & Economics
Languages : en
Pages : 232
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Book Description
Why should central banks fight against inflation? To answer this question, understanding the magnitude of welfare cost of inflation is important and becomes an active research field. Economists always make some assumptions to simplify the model from reality so that the model is tractable. But at the same time, these simplifications may affect the clear view on the source of inflation cost and affect the way to measure the cost of inflation. This book analyzes the welfare cost of inflation in a general equilibrium framework that takes into account more realistic factors in the real world, a framework with more generalized model settings of money demand side and money supply side. On the money demand side, interest-bearing deposits are introduced by applying the monetary aggregation theory; on the supply side, a banking sector is established to produce interest-bearing deposits. The research should be useful for central bankers and researchers who are conducting research on the policy of central banks, and should benefit economist, econometricians, and anyone else who are interested in general equilibrium model or nonlinear threshold estimation.
Author: Mr.Howell H. Zee
Publisher: International Monetary Fund
ISBN: 1451853440
Category : Business & Economics
Languages : en
Pages : 22
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Book Description
This paper provides general equilibrium estimates of the steady-state welfare gains of lowering inflation from a low level to close to price stability, using an overlapping-generations growth model. Money demand is modeled on the basis that real money balances are a factor of production. Assuming a standard Fisher equation modified by the presence of an income tax, it is found that inflation unambiguously reduces capital intensity, drives up the before-tax real rate of return to capital, and unambiguously imposes a life-time welfare cost. This welfare cost is, however, quantitatively very modest (under 0.2 percent of GDP annually) within reasonable ranges of all parameter values.
Author: Michael Dotsey
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper presents a general equilibrium monetary model in which inflation distorts a variety of marginal decisions. Although individually none of the distortions is very large, they combine to yield substantial welfare cost estimates. A sustained 4 percent inflation like that experienced in the US since 1983 costs the economy the equivalent of 0.41 percent of output per year when currency is identified as the relevant definition of money and over 1 percent of output per year when M1 is defined as money. The results illustrate how the traditional, partial equilibrium approach can seriously underestimate the true cost of inflation.
Author: W. Bolt
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: C. Angyridis
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines the costs associated with the level and variability of inflation in the context of a general equilibrium (GE) welfare measure which accommodates the optimal adjustments of all the endogenous variables in the model in response to the transfers received by the households. We compare and contrast the GE welfare costs with the conventional consumption equivalent (CE) measure across three utility functions that have been used routinely in the macroeconomics literature. We find that the GE welfare costs of inflation are substantially larger than those computed with the CE measure.
Author: Max Gillman
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 17
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Book Description
Author: Wing Leong Teo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study the welfare cost of inflation in a new Keynesian dynamic stochastic general equilibrium model. Nominal prices and wages are subjected to Taylor-style adjustments in the benchmark model. We find that the welfare cost of inflation in a new Keynesian dynamic stochastic general equilibrium model is much higher than its counterpart in a real business cycle model. We also find that the welfare cost of inflation increases linearly with the inflation rate with the introduction of monopolistic competition but rises faster as the inflation rate increases with the introduction of nominal rigidity. Alternative price and wage setting schemes, such as Rotemberg and Calvo-style adjustments would yield welfare costs of moderate inflation that are 2-10 times higher.
Author: Rubens Penha Cysne
Publisher:
ISBN:
Category :
Languages : en
Pages : 10
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Book Description
This work presents closed-form solutions to Lucas's (2000) general equilibrium expression for the welfare costs of inflation, as well as to the difference between the general-equilibrium measure and Bailey's (1956) partial-equilibrium measure. In Lucas's original work only numerical solutions are provided.
Author: Michael Hazilla
Publisher:
ISBN:
Category : Environmental policy
Languages : en
Pages : 88
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Book Description
