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Welfare Costs of Inflation and Interest-Bearing Money

Author

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  • Simonsen, Mario Henrique
  • Cysne, Rubens Penha

Abstract

This note extends the Lucas' analysis of the welfare cost of inflation to an economy with interest-bearing deposits. Lower and upper bounds to Lucas' measure of the welfare cost of inflation are also provided. The upper bound is shown to lie between Lucas' measure of the welfare cost of inflation and the area under the money-demand curve.

Suggested Citation

  • Simonsen, Mario Henrique & Cysne, Rubens Penha, 2001. "Welfare Costs of Inflation and Interest-Bearing Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(1), pages 90-100, February.
    • Handle: RePEc:mcb:jmoncb:v:33:y:2001:i:1:p:90-100
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    Citations

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    Cited by:

    1. Cysne, Rubens Penha, 2002. "A note on the integrability of partial-equilibrium measures of the welfare costs of inflation," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2357-2363.
    2. Cysne, Rubens Penha, 2004. "A general-equilibrium closed-form solution to the welfare costs of inflation (Forthcoming, Revista Brasileira de Economia)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 562, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    3. Cysne, Rubens P. & Maldonado, Wilfredo L. & Monteiro, Paulo Klinger, 2005. "Inflation and income inequality: A shopping-time approach," Journal of Development Economics, Elsevier, vol. 78(2), pages 516-528, December.
    4. Cysne, Rubens Penha & Turchick, David, 2010. "Welfare costs of inflation when interest-bearing deposits are disregarded: A calculation of the bias," Journal of Economic Dynamics and Control, Elsevier, vol. 34(6), pages 1015-1030, June.
    5. Cysne, Rubens Penha & Turchick, David, 2008. "On the consistency of arbitrary money-demand functions with the Sidrauski and the shopping-time models," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 666, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    6. Ryu‐ichiro Murota & Yoshiyasu Ono, 2012. "Zero Nominal Interest Rates, Unemployment, Excess Reserves And Deflation In A Liquidity Trap," Metroeconomica, Wiley Blackwell, vol. 63(2), pages 335-357, May.
    7. Dieter Nautz & Juliane Scharff, 2005. "Inflation and Relative Price Variability in a Low Inflation Country: Empirical Evidence for Germany," German Economic Review, Verein für Socialpolitik, vol. 6(4), pages 507-523, November.
    8. Cysne, Rubens Penha & Turchick, David, 2012. "An Ordering Of Measures Of The Welfare Cost Of Inflation In Economies With Interest-Bearing Deposits," Macroeconomic Dynamics, Cambridge University Press, vol. 16(5), pages 732-751, November.
    9. Cysne, Rubens Penha, 2006. "An intra-household approach to the welfare costs of inflation (Revised Version, Forthcoming 2006, Estudos Econômicos)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 612, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    10. Araujo, Aloisio & Leon, Marcia & Santos, Rafael, 2013. "Welfare analysis of currency regimes with defaultable debts," Journal of International Economics, Elsevier, vol. 89(1), pages 143-153.
    11. Cysne, Rubens Penha, 2005. "A General-Equilibrium Closed-Form Solution to the Welfare Costs of Inflation," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 59(2), April.
    12. repec:dau:papers:123456789/7353 is not listed on IDEAS
    13. Cysne, Rubens Penha & Turchick, David, 2009. "On the integrability of money-demand functions by the Sidrauski and the shopping-time models," Journal of Banking & Finance, Elsevier, vol. 33(9), pages 1555-1562, September.
    14. Heng-fu Zou & Liutang Gong & Xinsheng Zeng, 2011. "Inflation Aversion," Annals of Economics and Finance, Society for AEF, vol. 12(1), pages 1-11, May.
    15. Cysne, Rubens Penha & Maldonado, Wilfredo Fernando Leiva & Monteiro, P. K., 2004. "Inflation and income inequality: a shopping-time aproach: (Forthcoming, Journal of Development Economics)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 566, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    16. Mauro Boianovsky, 2002. "Simonsen and the early history of the cash\in-advance approach," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(1), pages 57-71.
    17. Cysne, Rubens Penha, 2004. "An intra-household approach to the welfare costs of inflation," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 521, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).

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