Welfare Costs of Inflation and Interest-Bearing Money

Mario Henrique Simonsen and Rubens Cysne

Journal of Money, Credit and Banking, 2001, vol. 33, issue 1, 90-100

Abstract: This note extends the Lucas' analysis of the welfare cost of inflation to an economy with interest-bearing deposits. Lower and upper bounds to Lucas' measure of the welfare cost of inflation are also provided. The upper bound is shown to lie between Lucas' measure of the welfare cost of inflation and the area under the money-demand curve.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:33:y:2001:i:1:p:90-100

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