The Welfare Effects of Inflation PDF Download
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Author: Karl-Heinz Tödter
Publisher:
ISBN: 9783865583666
Category :
Languages : de
Pages : 0
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Author: Karl-Heinz Tödter
Publisher:
ISBN: 9783865583666
Category :
Languages : de
Pages : 0
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Book Description
Author: Roland Benabou
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
Author: Karl-Heinz Tödter
Publisher:
ISBN:
Category :
Languages : en
Pages : 72
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Book Description
This paper reviews theory and evidence of the welfare effects of inflation from a costbenefit perspective. Basic models and selected empirical results are discussed. Historically, in assessing the welfare effects of inflation, the distortion of money demand played a prominent role. More recently, interactions of inflation and taxation came into focus. Growth effects of inflation as well as welfare effects of unanticipated inflation and of inflation uncertainty are also addressed. To assess the policy question whether inflation should be reduced or eliminated, the costs of disinflation play a role. Finally, the trade-off between the benefits of reducing inflation and the costs of disinflation is discussed and an overall assessment of the net welfare effects of achieving price stability is provided.
Author: Mr.Jose De Gregorio
Publisher: International Monetary Fund
ISBN: 145193128X
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces transaction costs, a fall in the costs of inflation is equivalent to financial innovation. This can be caused by paying interest on deposits, indexing money, or “dollarizing.” Results indicate that financial innovation raises welfare in low inflation economies while reducing it in high inflation economies, due to the offsetting indirect effect of higher inflation to finance the budget.
Author: Mariano Tommasi
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 72
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Book Description
Author: C. D. Cohen
Publisher:
ISBN:
Category : Public welfare
Languages : en
Pages : 0
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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: Matthias Doepke
Publisher:
ISBN:
Category : Income distribution
Languages : en
Pages : 64
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Book Description
Episodes of unanticipated inflation reduce the real value of nominal claims and thus redistribute wealth from lenders to borrowers. In this study, we consider redistribution as a channel for aggregate and welfare effects of inflation. We model an inflation episode as an unanticipated shock to the wealth distribution in a quantitative overlapping-generations model of the U.S. economy. While the redistribution shock is zero sum, households react asymmetrically, mostly because borrowers are younger on average than lenders. As a result, inflation generates a decrease in labor supply as well as an increase in savings. Even though inflation-induced redistribution has a persistent negative effect on output, it improves the weighted welfare of domestic households.
Author: William D. Nordhaus
Publisher:
ISBN:
Category : Income distribution
Languages : en
Pages : 504
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Author: Mr.Etienne B. Yehoue
Publisher: International Monetary Fund
ISBN: 147550537X
Category : Business & Economics
Languages : en
Pages : 36
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Book Description
The financial crisis in the advanced countries that began in 2007 has led central bankers to adopt unconventional policy measures as policy interest rates neared the zero bound. One suggestion (Blanchard, Dell’Ariccia, and Mauro, 2010) has been to raise inflation targets to provide more room for policy rate easing during crises. This paper addresses a different issue: the relationship between inflation and welfare. The literature is surveyed and a model is developed. A key conclusion is that an increase in inflation targets gives rise to additional welfare costs, even after the extra room to maneuver above the zero lower bound for nominal policy rates is taken into account. Based on parameter values that fit U.S. data, the additional welfare costs of raising inflation targets from 2 to 4 percent are estimated at about 0.3 percent of annual real income. A rise to 10 percent would yield additional welfare costs of about 1 percent of real income. Other parameter values yield welfare costs as high as 7 (respectively 30) percent of real income for raising inflation targets from 2 to 4 (respectively from 2 to 10) percent. The full costs of raising inflation targets are likely to be higher because the model used to generate these estimates does not account for higher inflation-induced volatility.
