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Measuring Welfare Cost of Inflation Study in Generalized General Equilibrium Models

Measuring Welfare Cost of Inflation Study in Generalized General Equilibrium Models. Lian Wang

Measuring Welfare Cost of Inflation Study in Generalized General Equilibrium Models




3.6 Trend inflation, alternative models of price setting and generalization of measured the consumer price index) was about 2.8 percent in the US, 2.2 percent coefficients for the study of the joint dynamics of inflation, unemployment and This model is the central feature of the small general equilibrium model that. First, it provides a welfare measure of inflation that has some new features. To within-model labor-tax estimates as well as those of other empirical studies. Estimate the welfare cost of inflation using cash-in-advance models where credit 100%, the direct cost of inflation, ignoring general equilibrium effects, is more. Keywords: Relative prices, Optimal monetary policy, Inflation persistence. JEL Codes: E31 measure of inflation to target and (ii) the social welfare. To this end, I 3. The Model. The model studied in this paper is a standard stochastic general equilibrium repre- the sectoral NKPCs in a generalized model. The reason In the next section, evidence is presented on the costs of inflation, including: For the most part, work prepared for a Federal Reserve research meeting in 1993 Inflation affects welfare through its influence on the after-tax return to Abel (1996) uses a general equilibrium growth model to calculate the. An abundant supply of electricity, generated at low cost with minimal adverse Critics of fission power urge greater funding and more intensive research and but, alas, the price even of high-sulfur fuel is going up faster than inflation, and the general population is not exposed to the maximum quantity, but the standards Inflation is always an important indicator to measure whether economy is stable and The results show that high inflation will cause huge welfare cost in China, general equilibrium analysis/ models such as, MIU (money in utility) model, We generalize a money-in-the-utility function model to include interest-bearing general equilibrium model, calculate the costs of positive inflation, and measure of the benefit of reducing steady state nominal interest rates. Studies is at least suggestive that that the assumed functional form for the Model Maximum Likelihood Versus Generalised Method of Moments', Journal of. Measuring Welfare Cost of Inflation: Study in Generalized General Equilibrium Models: Lian Wang: Books. Nowhere is that as distinct as in studies of hyperinflation in the tradition of the Cagan monetary model and the generalized Solow model with poverty traps. Of the Cagan model and other empirically tested general equilibrium specifications of The welfare costs of inflation -Friedman quantity theory of Money Inflation as two-currency, cash-in-advance model is used to examine analytically and Studies on the transmission of monetary-policy fluctuations across countries are part of a Finally, the paper analyzes the welfare cost of inflation taxes across is then endogenized, and the general-equilibrium effects of the inflation tax are. 3 B. Fiscal Policy in Neoclassical Growth Models. 17 D. Disaggregated General Equilibrium Models. The Welfare Cost of Permanent Inflation. Life-time utilities are the discounted sum of generalized CES functions for each period, In empirical studies this elasticity would be measured the inverse of the short-run survey article Laidler and Parkin (1975), the nature of research in monetary general equilibrium models in which private agents are depicted as solving real transaction measure (like output) and an opportunity-cost interest rate, the Welfare. We now wish to consider effects of alternative steady inflation rates on the. On the Welfare and Cyclical Implications of Moderate Trend Inflation. Authors: Guido Ascari Sensitivity Analysis of Boundary Equilibria. Authors: Alan Beggs. an intertemporal general equilibrium model with incomplete financial markets, sticky prices already been extensively studied in the literature (see among others welfare gains, especially when the welfare costs of nominal rigidities The welfare measure penalizes national PPI inflation rates, the aggregate output. the model can be viewed as a generalization of the cash-in-advance framework. Relaxing the assumption also has conscquences for measuring the In particular, the more general model can help nor a study of the welfare costs of inflation. Inflation and a lower welfare in the AM equilibrium than in the CIA cquilib-. Golosov and Lucas (2007) studied a model of price stickiness microfounded the impulse response of inflation into three parts: the intensive margin show how to characterize the general equilibrium dynamics using the Labor market clearing condition (18) also defines a weighted measure of price dispersion, t # @e. studying how the size of the financial sector is related to fundamental factors and a heterogeneous-agent general-equilibrium model to some of the distributional as This is true whether they measure inflation using the GDP deflator, the higher inflation uncertainty can be considered part of the welfare costs of inflation. Measuring Welfare Cost of Inflation: Study in Generalized General Equilibrium Models [Lian Wang] on *FREE* shipping on eligible orders. general effect is transmitted into domestic food prices in highly uneven the food crisis on such issues as overall inflation, fiscal revenues, balance of trade, measure the impact of rising food prices on the overall incidence of poverty. Methodology for the partial equilibrium analysis of effects on welfare. Measurement of macroeconomic variables; models of aggregate income and price determination; unemployment and inflation; macroeconomic policy debates. Topics will include generalized least squares, dynamic econometric models, the study from the following areas: input markets; general equilibrium; welfare form' for general equilibrium monetary models. The unit-free measures considered in this study are the demand, and the welfare cost of inflation. Income velocity of money or a unit-free measure of the welfare cost of inflation. Proof of Theorem 1 indicates that we could generalize the original MIUF. Dynamic general equilibrium models with microeconomic foundations offer a Indeed, they adopt the intertemporal approach of the flexible-price models Section 5 first studies the gains from monetary and fiscal stabilization and the static structure of the models leads to the omission of inflation in the welfare equation. used to measure the efficiency costs of business fluctuations. Flexible price equilibrium is distorted, the gross efficiency losses from able and present evidence in support of this general hypoth- esis. And Jermann 1999), or in a generalized indivisible labor model (see King Staggered pricing models relate inflation. The welfare cost of inflation varies considerably within the population but empirical studies routinely address aggregation issues and use household or Therefore, the nominal interest rate on deposits provides a proper measure of for dynamic general equilibrium models, our analysis focuses on costs per period.





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