Welfare Cost of (Low) Inflation

Welfare Cost of (Low) Inflation

A General Equilibrium Perspective

by Mr. Howell H. Zee

21 pages· 1998· ISBN 9781451898927
Join Readfeed freeFind clubs reading this bookBrowse readable books
About
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.

Discuss Welfare Cost of (Low) Inflation with other readers

Join or start a book club for Welfare Cost of (Low) Inflation on Readfeed. Live chat, shared reading progress, and AI discussion questions — free to get started.

Sign up freeBrowse book clubs

Frequently asked questions

How do I join a book club for Welfare Cost of (Low) Inflation?

Sign up free on Readfeed, then browse public clubs or start your own club with Welfare Cost of (Low) Inflation as the current read. Invite friends with a share link and discuss together with live chat and AI discussion questions.

Can I discuss Welfare Cost of (Low) Inflation with other readers online?

Yes. Readfeed book clubs let you chat live, share progress, and join discussions about Welfare Cost of (Low) Inflation with readers worldwide — whether your club is virtual, in-person, or hybrid.

Is Readfeed free?

Yes. Creating an account and joining book clubs is free. Sign up to find readers who love the same books and start discussing today.