On the costs of inflation with a general equilibrium welfare measure and alternative utility functions

Constantine Angyridis, Arman Mansoorian and Leo Michelis

Journal of Macroeconomics, 2025, vol. 84, issue C

Abstract: This paper examines the costs associated with the level and variability of inflation in the context of a general equilibrium (GE) welfare measure which accounts for the optimal adjustments of all the endogenous variables in the model in response to the transfers received by the households. We compare and contrast the GE welfare costs with the conventional consumption equivalent (CE) measure across three utility functions that have been used routinely in the macroeconomics literature.

Keywords: Inflation; Welfare measure; Compensating variation; Dynamic general equilibrium (search for similar items in EconPapers)
JEL-codes: E60 H20 H30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:84:y:2025:i:c:s0164070425000151

DOI: 10.1016/j.jmacro.2025.103678

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