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The Costs and Benefits of Inflation: Evaluation for Japan's Economy
| Content Provider | Semantic Scholar |
|---|---|
| Author | Fuchi, Hitoshi Oda, Nobuyuki Ugai, Hiroshi |
| Copyright Year | 2007 |
| Abstract | This paper quantitatively evaluates a steady-state inflation rate that is considered desirable from the perspective of social welfare, using a model describing the Japanese economy. Specifically, it begins by setting out points concerning the costs and benefits that accompany inflation. We build a model capable of evaluating the effects, on social welfare, of several of these points: the opportunity cost of holding money, the zero lower bound on nominal interest rates, price stickiness and the downward wage rigidity. Building on this, we conduct a stochastic simulation that quantitatively evaluates the social loss with different steady-state inflation rates. We also analyze the range of changes in the steady-state inflation rate that minimizes the social loss when we change the model settings. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.boj.or.jp/en/research/wps_rev/wps_2007/data/wp07e10.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
