Inflation and Welfare: Comment on Robert Lucas

Hans-Werner Sinn

No 6979, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper argues that Lucas overestimates the Friedman-Bailey type of welfare cost of inflation and neglects other important welfare effects. With an alternative interpretation of the non-observability of low interest rates than the one Lucas gave and the introduction of taxes that reduce the opportunity cost of money holding, the welfare cost shrinks to one third of Lucas' estimate. The neglected welfare effects of inflation include an adverse Baumol-Tobin effect on growth and international capital movements, historical cost accounting for tax purposes, uncertainty about the price level and the relationship between inflation, relative prices and structural change.

Date: 1999-02
New Economics Papers: this item is included in nep-dge and nep-pke
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as CESifo Discussion Paper Nr.179, 1999
Published in A. Leijonhufvud(ed.), "Monetary Theory as a Basis for Monetary Policy," MacMillan, 2001.

Downloads: (external link)
http://www.nber.org/papers/w6979.pdf (application/pdf)

Related works:
Working Paper: Inflation and Welfare: Comment on Robert Lucas (1999)
Working Paper: Inflation and Welfare: Comment on Robert Lucas (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:6979

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6979

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().