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Rethinking the welfare cost of inflation

Author

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  • Ben R. Craig
  • Guillaume Rocheteau

Abstract

New models of monetary economies, developed in the last 15 years, suggest that traditional measures of the welfare cost of inflation may underestimate the true loss that inflation inflicts on society. According to these models, the cost of 10 percent inflation ranges from 1 to 5 percent of real income.

Suggested Citation

  • Ben R. Craig & Guillaume Rocheteau, 2005. "Rethinking the welfare cost of inflation," Economic Commentary, Federal Reserve Bank of Cleveland, issue Mar.
    • Handle: RePEc:fip:fedcec:y:2005:i:mar1
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    File URL: https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2005-economic-commentaries/ec-20050301-rethinking-the-welfare-cost-of-inflation.aspx
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    Cited by:

    1. Berentsen, Aleksander & Rojas Breu, Mariana & Shi, Shouyong, 2012. "Liquidity, innovation and growth," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 721-737.

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    Keywords

    Inflation (Finance);

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