This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Journal: Macroeconomics: Vol. 4 No. 2 (April 2012)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Macro - All Issues

AEJ: Macro Forthcoming Articles

Rebalancing Frequency and the Welfare Cost of Inflation

Article Citation

Silva, André C. 2012. "Rebalancing Frequency and the Welfare Cost of Inflation." American Economic Journal: Macroeconomics, 4(2): 153-83.

DOI: 10.1257/mac.4.2.153

Abstract

Cash-in-advance models usually require agents to reallocate money and bonds in fixed periods. Every month or quarter, for example. I show that fixed periods underestimate the welfare cost of inflation. I use a model in which agents choose how often they exchange bonds for money. In the benchmark specification, the welfare cost of 10 percent instead of 0 inflation increases from 0.1 percent of income with fixed periods to 1 percent with optimal periods. The results are robust to different preferences, to different compositions of income in bonds or money, and to the introduction of capital and labor. (JEL: E30, E40, E50)

Article Full-Text Access

Full-text Article

Additional Materials

Download Data Set (51.21 KB)

Authors

Silva, André C. (New U Lisbon)

JEL Classifications

E30: Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E40: Money and Interest Rates: General
E50: Monetary Policy, Central Banking, and the Supply of Money and Credit: General

Comments

View Comments on This Article (0) | Login to post a comment


American Economic Journal: Macroeconomics


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Macro - All Issues

AEJ: Macro - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us