Rethinking the Welfare Cost of Inflation

TL;DR: However, there seems that many obscurities remain in his criticism of the classical and neo-classical position in monetary theory, as presented by several authors as mentioned in this paper, and Tyler appears to simply state that their argument is incorrect, without substantiating such a conclusion anywhere in the article.

TL;DR: Wang et al. as discussed by the authors provided a substantive survey of the research on the welfare cost of inflation, and used the methods of consumer's surplus and neo-classical general equilibrium models respectively to estimate the welfare costs of inflation in China.

TL;DR: In this paper, the authors integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation on welfare, growth and the size of the financial sector.

TL;DR: In this paper, the authors propose a new framework, based on explicit micro foundations, within which macro policy can be studied and calibrate the model to standard observations and use it to measure the cost of inflation.

TL;DR: In a monetary economy, it is in everyone's private interest to try to get someone else to hold non-interest-bearing cash and reserves as mentioned in this paper. But someone has to hold it all, so these efforts must simply cancel out.

TL;DR: This article proposed a framework based on explicit micro foundations within which macro policy can be analyzed and demonstrated that the model is both analytically tractable and amenable to quantitative analysis by using it to estimate the welfare cost of inflation.

TL;DR: In recent years several governments have been tempted to resort to open inflation as a method of financing a desired diversion of resources to the government sector of the economy, because of the apparently painless character of this method of diversion as discussed by the authors.