Inflation costs: Philadephia Fed working paper
A new working paper from the Federal Reserve Bank of Philadelphia analyses the costs of inflation in an estimated dynamic stochastic general equilibrium model of the US economy.
The author, Pablo A. Guerron-Quintana, finds that ten percentage points of inflation entails a steady state welfare cost as high as 13% of annual consumption.
This large cost is mainly driven by staggered price contracts and price indexation, he shows.
Click here to read the paper
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