06900oam 22012374 450 991082619570332120240402045429.01-4755-7925-X1-4755-1365-8(CKB)2670000000278865(EBL)1606884(SSID)ssj0000943220(PQKBManifestationID)11479831(PQKBTitleCode)TC0000943220(PQKBWorkID)10974828(PQKB)11112956(MiAaPQ)EBC1606884(Au-PeEL)EBL1606884(CaPaEBR)ebr10627086(OCoLC)801723341(IMF)WPIEE2012189(IMF)WPIEA2012189(EXLCZ)99267000000027886520020129d2012 uf 0engur|n|---|||||txtccrOn Price Stability and Welfare /Etienne Yehoue1st ed.Washington, D.C. :International Monetary Fund,2012.1 online resource (37 p.)IMF Working PapersDescription based upon print version of record.1-4755-4186-4 1-4755-0537-X Includes bibliographical references.Cover; Contents; I. Introduction; II. Inflation and Growth; III. Inflation and Welfare: A General Equilibrium Approach; Tables; 1. Inflation Targets or Definitions of Price Stability in Selected Countries; A. The Opportunity Cost Channel; B. A Simple Model of Inflation and Welfare; 2. Summary of the Calibration Results; C. The Menu Cost Channel; D. Some Caveats; IV. Balancing Costs and Benefits; V. Concluding Remarks; Figures; 1. Welfare Cost Function with Log-Log Money Demand Function, Alpha = 0.5 and K= (0.05)2. Welfare Cost Function with Log-Log Money Demand Function, Alpha = 0.5 and K = exp (0.05)3. Welfare Cost Function with Semi-Log Money Demand Function, Alpha = 7 and K= (0.3548); 4. Welfare Cost Function with Semi-Log Money Demand Function, Alpha = 7 and K = exp(0.3548); 5. Welfare Costs at Various Inflation Targets with Log-Log Money Demand Function, Alpha = 0.5 and K = (0.05); 6. Welfare Costs at Various Inflation Targets with Log-Log Money Demand Function, Alpha = 0.5 and K = exp (0.05)7. Welfare Costs at Various Inflation Targets with Semi-Log Money Demand Function, Alpha = 7 and K = (0.3548)8. Welfare Costs at Various Inflation Targets with Semi-Log Money Demand Function, Alpha = 7 and K = exp (0.3548); 9. Welfare Costs at Various Inflation Targets with Semi-Log Money Demand Function, Alpha = 1.7944 and K = (0.1686); 10. Welfare Costs at Various Inflation Targets with Semi-Log Money Demand Function, Alpha = 1.7944 and K = exp (0.1686); 11. Welfare Costs at Various Inflations with Log-Log Money Demand Function, Alpha = 0.5 and K = (0.05)12. Welfare Costs at Various Inflations with Log-Log Money Demand Function, Alpha = 0.5 and K = exp (0.05)13. Welfare Costs at Various Inflations with Semi-Log Money Demand Function, Alpha = 7 and K = (0.3548); 14. Welfare Costs at Various Inflations with Semi-Log Money Demand Function, Alpha = 7 and K = exp (0.3548); ReferencesThe financial crisis in the advanced countries that began in 2007 has led central bankers to adopt unconventional policy measures as policy interest rates neared the zero bound. One suggestion (Blanchard, Dell’Ariccia, and Mauro, 2010) has been to raise inflation targets to provide more room for policy rate easing during crises. This paper addresses a different issue: the relationship between inflation and welfare. The literature is surveyed and a model is developed. A key conclusion is that an increase in inflation targets gives rise to additional welfare costs, even after the extra room to maneuver above the zero lower bound for nominal policy rates is taken into account. Based on parameter values that fit U.S. data, the additional welfare costs of raising inflation targets from 2 to 4 percent are estimated at about 0.3 percent of annual real income. A rise to 10 percent would yield additional welfare costs of about 1 percent of real income. Other parameter values yield welfare costs as high as 7 (respectively 30) percent of real income for raising inflation targets from 2 to 4 (respectively from 2 to 10) percent. The full costs of raising inflation targets are likely to be higher because the model used to generate these estimates does not account for higher inflation-induced volatility.IMF Working Papers; Working Paper ;No. 2012/189Price regulationWelfare economicsBanks and BankingimfInflationimfMacroeconomicsimfMoney and Monetary PolicyimfMathematical MethodsimfPrice LevelimfDeflationimfDemand for MoneyimfMoney and Interest Rates: Forecasting and SimulationimfMonetary PolicyimfPersonal Income, Wealth, and Their DistributionsimfInterest Rates: Determination, Term Structure, and EffectsimfMonetary economicsimfFinanceimfInflation targetingimfDemand for moneyimfPersonal incomeimfReal interest ratesimfMonetary policyimfPricesimfMoneyimfNational accountsimfFinancial servicesimfIncomeimfInterest ratesimfUnited StatesimfPrice regulation.Welfare economics.Banks and BankingInflationMacroeconomicsMoney and Monetary PolicyMathematical MethodsPrice LevelDeflationDemand for MoneyMoney and Interest Rates: Forecasting and SimulationMonetary PolicyPersonal Income, Wealth, and Their DistributionsInterest Rates: Determination, Term Structure, and EffectsMonetary economicsFinanceInflation targetingDemand for moneyPersonal incomeReal interest ratesMonetary policyPricesMoneyNational accountsFinancial servicesIncomeInterest rates362.6Yehoue Etienne1160516DcWaIMFBOOK9910826195703321On Price Stability and Welfare4075909UNINA