LEADER 06858oam 22012134 450 001 9910786483003321 005 20230801225352.0 010 $a1-4755-7925-X 010 $a1-4755-1365-8 035 $a(CKB)2670000000278865 035 $a(EBL)1606884 035 $a(SSID)ssj0000943220 035 $a(PQKBManifestationID)11479831 035 $a(PQKBTitleCode)TC0000943220 035 $a(PQKBWorkID)10974828 035 $a(PQKB)11112956 035 $a(MiAaPQ)EBC1606884 035 $a(Au-PeEL)EBL1606884 035 $a(CaPaEBR)ebr10627086 035 $a(OCoLC)801723341 035 $a(IMF)WPIEE2012189 035 $a(IMF)WPIEA2012189 035 $a(EXLCZ)992670000000278865 100 $a20020129d2012 uf 0 101 0 $aeng 135 $aur|n|---||||| 181 $ctxt 182 $cc 183 $acr 200 10$aOn Price Stability and Welfare /$fEtienne Yehoue 210 1$aWashington, D.C. :$cInternational Monetary Fund,$d2012. 215 $a1 online resource (37 p.) 225 1 $aIMF Working Papers 300 $aDescription based upon print version of record. 311 $a1-4755-4186-4 311 $a1-4755-0537-X 320 $aIncludes bibliographical references. 327 $aCover; 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) 327 $a2. 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) 327 $a7. 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) 327 $a12. 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); References 330 3 $aThe financial crisis in the advanced countries that began in 2007 has led central bankers to adopt unconventional policy measures as policy interest rates neared the zero bound. One suggestion (Blanchard, Dell?Ariccia, and Mauro, 2010) has been to raise inflation targets to provide more room for policy rate easing during crises. This paper addresses a different issue: the relationship between inflation and welfare. The literature is surveyed and a model is developed. A key conclusion is that an increase in inflation targets gives rise to additional welfare costs, even after the extra room to maneuver above the zero lower bound for nominal policy rates is taken into account. Based on parameter values that fit U.S. data, the additional welfare costs of raising inflation targets from 2 to 4 percent are estimated at about 0.3 percent of annual real income. A rise to 10 percent would yield additional welfare costs of about 1 percent of real income. Other parameter values yield welfare costs as high as 7 (respectively 30) percent of real income for raising inflation targets from 2 to 4 (respectively from 2 to 10) percent. The full costs of raising inflation targets are likely to be higher because the model used to generate these estimates does not account for higher inflation-induced volatility. 410 0$aIMF Working Papers; Working Paper ;$vNo. 2012/189 606 $aPrice regulation 606 $aWelfare economics 606 $aBanks and Banking$2imf 606 $aInflation$2imf 606 $aMacroeconomics$2imf 606 $aMoney and Monetary Policy$2imf 606 $aMathematical Methods$2imf 606 $aPrice Level$2imf 606 $aDeflation$2imf 606 $aDemand for Money$2imf 606 $aMoney and Interest Rates: Forecasting and Simulation$2imf 606 $aMonetary Policy$2imf 606 $aPersonal Income, Wealth, and Their Distributions$2imf 606 $aInterest Rates: Determination, Term Structure, and Effects$2imf 606 $aMonetary economics$2imf 606 $aFinance$2imf 606 $aInflation targeting$2imf 606 $aDemand for money$2imf 606 $aPersonal income$2imf 606 $aReal interest rates$2imf 606 $aMonetary policy$2imf 606 $aPrices$2imf 606 $aMoney$2imf 606 $aNational accounts$2imf 606 $aFinancial services$2imf 606 $aIncome$2imf 606 $aInterest rates$2imf 607 $aUnited States$2imf 615 0$aPrice regulation. 615 0$aWelfare economics. 615 7$aBanks and Banking 615 7$aInflation 615 7$aMacroeconomics 615 7$aMoney and Monetary Policy 615 7$aMathematical Methods 615 7$aPrice Level 615 7$aDeflation 615 7$aDemand for Money 615 7$aMoney and Interest Rates: Forecasting and Simulation 615 7$aMonetary Policy 615 7$aPersonal Income, Wealth, and Their Distributions 615 7$aInterest Rates: Determination, Term Structure, and Effects 615 7$aMonetary economics 615 7$aFinance 615 7$aInflation targeting 615 7$aDemand for money 615 7$aPersonal income 615 7$aReal interest rates 615 7$aMonetary policy 615 7$aPrices 615 7$aMoney 615 7$aNational accounts 615 7$aFinancial services 615 7$aIncome 615 7$aInterest rates 700 $aYehoue$b Etienne$01160516 801 0$bDcWaIMF 906 $aBOOK 912 $a9910786483003321 996 $aOn Price Stability and Welfare$93858217 997 $aUNINA