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:: year 3, Issue 8 (summer 2011) ::
JMBR 2011, 3(8): 87-120 Back to browse issues page
Consideration of the Welfare Cost of Inflation with General Equilibrium Model Approach
Yazdan Gudarzi Farahani 1, Shiva Moshtaridoust, Behzad Varmazyari
Abstract:   (2389 Views)

 In this paper we studied the welfare cost of inflation. Therefore، to meet this end، we use a three section new Keynesian model of the dynamic Stochastic General equilibrium. Inflation is a complex phenomenon that has destructive effects on society. In this model we aim to solve linear log and non linear form by using annual data for Iran. The empirical findings indicate that welfare cost of inflation is equivalent to 5.5 percent of GDP for 10 percent of inflation، and we find that for a model with full indexation the welfare cost of inflation is equivalent to 3.7 percent decrease in GDP. Moreover، results show that fluctuation in sustainable level of inflation leads to a decrease in the social welfare.

JEL classification: E31, E42, E51

Keywords: Inflation, Welfare cost, DSGE, New Keynesian
Full-Text [PDF 351 kb]   (785 Downloads)    
Type of Study: Empirical Study |
Received: 2014/08/4 | Accepted: 2014/08/4 | Published: 2014/08/4
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year 3, Issue 8 (summer 2011) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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