Welfare cost of inflation
In macroeconomics, the welfare cost of inflation comprises the changes in social welfare caused by inflation. The traditional approach, developed by (1956) and Friedman (1969), treats real money balances as a consumption good and inflation as a tax on real balances. This approach measures the welfare cost by computing the appropriate area under the money demand curve. Fischer (1981) and Lucas (1981), find the cost of inflation to be low. Fischer computes the deadweight loss generated by an increase in inflation from zero to 10 percent as just 0.3 percent of GDP using the monetary base as the definition of money. Lucas places the cost of a 10 percent inflation at 0.45 percent of GDP using M1 as the measure of money. Lucas (2000) revised his estimate upward, to slightly less than 1 percent
Link from a Wikipage to another Wikipage
primaryTopic
Welfare cost of inflation
In macroeconomics, the welfare cost of inflation comprises the changes in social welfare caused by inflation. The traditional approach, developed by (1956) and Friedman (1969), treats real money balances as a consumption good and inflation as a tax on real balances. This approach measures the welfare cost by computing the appropriate area under the money demand curve. Fischer (1981) and Lucas (1981), find the cost of inflation to be low. Fischer computes the deadweight loss generated by an increase in inflation from zero to 10 percent as just 0.3 percent of GDP using the monetary base as the definition of money. Lucas places the cost of a 10 percent inflation at 0.45 percent of GDP using M1 as the measure of money. Lucas (2000) revised his estimate upward, to slightly less than 1 percent
has abstract
In macroeconomics, the welfare ...... etween 3 and 4 percent of GDP.
@en
Wikipage page ID
27,745,133
page length (characters) of wiki page
Wikipage revision ID
980,978,893
Link from a Wikipage to another Wikipage
wikiPageUsesTemplate
comment
In macroeconomics, the welfare ...... slightly less than 1 percent
@en
label
Welfare cost of inflation
@en