Economics, Econometrics and Finance
4 years ago

Inflation Tax Hits Hard: Impact on Business Cycles and Welfare Costs

Routledge eBooks
The Inflation Tax in a Real Business Cycle Model
Thomas Cooley, Gary D. Hansen

Paper Summary

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The article explores how inflation affects the economy by studying high and low inflation scenarios. By using a model that includes money and analyzing the impact of money growth variability, the researchers found that the business cycle differs in high and low inflation economies. They also measured the cost of inflation on welfare and compared the steady-state properties of high and low inflation economies.