Measuring the contribution of durable goods to the welfare cost of inflation

Arman Mansoorian and Leo Michelis

Canadian Journal of Economics, 2016, vol. 49, issue 2, 815-833

Abstract: In this paper, we measure the contribution of durable goods to the welfare cost of inflation, in the context of an endogenous growth model with durable and nondurable goods, where purchases of the latter require only a partial cash payment compared with the former. Unlike existing measures, our proposed welfare measure is computationally efficient and relatively easy to implement.We find that durability adds a significant component to the welfare costs of inflation.

JEL-codes: E22 (search for similar items in EconPapers)
Date: 2016
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