The welfare cost of inflation in general equilibrium

Article Abstract:

A general equilibrium monetary model is developed where inflation tax distorts different marginal decisions. The distortions yield significant welfare cost estimates when combined, although insignificant when taken individually. An inflation rate of 4% in 1983 cost the US economy a 0.41% output annually when currency pertains to the relevant definition of money and more than 1% of output annually when M1 is identified as money. Findings show how the partial equilibrium approach can significantly underestimate the cost of inflation.

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Expectations and the nonneutrality of Lucas

Article Abstract:

Economist Robert E. Lucas is known for his paper entitled 'Expectations and the Neutrality of Money.' Lucas designed the paper as a counterexample to the interpretation of a negative unemployment-inflation correlation which could be exploited by a certain monetary-fiscal policy. The state of macroeconomics in the late 1960s is likewise presented, while the concepts of equilibrium, monetarism, fiscalism and the proposed standards of Lucas as stated in his paper are studied.

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Inflation uncertainty and growth in a cash-in-advance economy

Article Abstract:

Economic growth in a cash-in-advance model and the effects of inflation variability are examined.

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