The Welfare Costs of Inflation
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 range between 0.20% and 1.5% of lifetime consumption for the United States and find even higher values for some European countries.
File(s): File format is application/pdf https://www.minneapolisfed.org/research/wp/wp783.pdf
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Working Papers
Publication Date: 2021-09-24