Skip to main content

Rethinking the Welfare Cost of Inflation

(PDF PDF icon)

New models of monetary economies, developed in the last 15 years, suggest that traditional measures of the welfare cost of inflation may underestimate the true loss that inflation inflicts on society. According to these models, the cost of 10 percent inflation ranges from 1 to 5 percent of real income.

New models of monetary economies, developed in the last 15 years, suggest that traditional measures of the welfare cost of inflation may underestimate the true loss that inflation inflicts on society. According to these models, the cost of 10 percent inflation ranges from 1 to 5 percent of real income.


Suggested citation: Craig, Ben R., and Guillaume Rocheteau, 2005. "Rethinking the Welfare Cost of Inflation," Federal Reserve Bank of Cleveland, Economic Commentary, 03.01.2005.

Upcoming EventsSEE ALL

  • No Upcoming Events to display, please check back soon.