Welfare costs of inflation in a dynamic economy with search unemployment and endogenous growth
Recent work on money and endogenous growth finds modest welfare costs of inflation. Furthermore, high inflation reduces the growth rate. The author presents a monetary endogenous growth model with labor market frictions in the form of search unemployment which is calibrated for the US economy. Inter...
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| Format: | UnknownFormat |
| Sprache: | eng |
| Veröffentlicht: |
Munich
Univ., Center for Economic Studies
2000
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| Schriftenreihe: | CESifo working paper series
296 |
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Tag hinzufügen | Zusammenfassung: | Recent work on money and endogenous growth finds modest welfare costs of inflation. Furthermore, high inflation reduces the growth rate. The author presents a monetary endogenous growth model with labor market frictions in the form of search unemployment which is calibrated for the US economy. Interestingly, both employment and the growth rate may even increase with the rate of inflation depending on the elasticity of labor supply. Considering the transition dynamics following a change in the monetary policy, the optimal quarterly inflation rate is found to amount to approximately 3,5% in the benchmark case. A reduction of the inflation rate from its optimal value to zero results in a welfare loss equal to 0,3% of total consumption. |
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| Beschreibung: | Literaturverz. S. 19 - 20 Auch im Internet unter der Adresse ftp://129.187.96.124/CESifo_WP/296.pdf verfügbar |
| Beschreibung: | 20 S graph. Darst |