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The Welfare Costs of Inflation

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  • Luca Benati
  • Juan-Pablo Nicolini

Abstract

We revisit the estimation of the welfare costs of inflation originating from lack of liquidity satiation. We use data for the United States and several other developed countries. Our computations are heavily influenced by the recent experience of very low, even negative, short term rates observed in the countries we study. We obtain estimates that are close to those obtained by Lucas (2000), and an order of magnitude higher than those in Ireland (2009).

Suggested Citation

  • Luca Benati & Juan-Pablo Nicolini, 2021. "The Welfare Costs of Inflation," Diskussionsschriften dp2113, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp2113
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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