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Some costs and benefits of price stability in the UK

Author

Listed:
  • Hasan Bakhshi
  • Andrew Haldane
  • Neal Hatch

Abstract

This paper quantifies some of the costs of inflation in the United Kingdom. It focuses in particular on inflation distortions under an imperfectly indexed tax system and distortions to money demand. In the United States, an earlier study by Feldstein found that lowering inflation by 2 percentage points could generate welfare benefits of as much as 1% of GDP per year forever. In the United Kingdom, the benefits are found to be smaller, but still substantial, at 0.2% of GDP per year.

Suggested Citation

  • Hasan Bakhshi & Andrew Haldane & Neal Hatch, 1998. "Some costs and benefits of price stability in the UK," Bank of England working papers 78, Bank of England.
  • Handle: RePEc:boe:boeewp:78
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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1998/wp78.pdf
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Greenspan, welfare states & inflation
      by chris dillow in Stumbling and Mumbling on 2007-09-18 14:41:46

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    Cited by:

    1. Hasan Bakhshi & Jens Larsen, 2001. "Investment-specific technological progress in the United Kingdom," Bank of England working papers 129, Bank of England.
    2. repec:pid:journl:v:56:y:2017:i:1:p:31-58 is not listed on IDEAS
    3. Hasan Bakhshi & Jens Larsen, 2001. "Investment-specific technological progress in the United Kingdom," BIS Papers chapters,in: Bank for International Settlements (ed.), Empirical studies of structural changes and inflation, volume 3, pages 49-80 Bank for International Settlements.
    4. Hasan Bakhshi, 1999. "Is the demand for retirement consumption linear?," Applied Economics Letters, Taylor & Francis Journals, vol. 6(10), pages 669-671.

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