نوع مقاله : مقاله پژوهشی
عنوان مقاله English
نویسندگان English
Inflation has negative effects on economic welfare in different ways. In other words, it may cause welfare costs for society. Many studies indicate that there is a positive and statistically significant relationship between monetary policy and inflation, particularly in developing countries including Iran. Estimation of welfare cost of inflation may help policy makers as well as monetary authorities to evaluate the welfare effects of their policies and decide how to proceed.
This paper defines a money demand function for Iran's money market, then by applying advanced econometrics techniques and based on Lucas Logarithmic model (2000) and Caygan’s semi log version (1956), the welfare cost of inflation is estimated for the period of 1958-2007.
The results indicate that if the inflation rate increase from 3 percent to 15 percent, the welfare cost of inflation based on the logarithmic model would increase from 0.14 percent of GDP to 1.7 percent of GDP and based on the semi logarithmic model, from 0.12 GDP to 2.3 percent of GDP. The paper argues that the semi logarithmic model is more appropriate for calculating welfare cost of Inflation in Iran
کلیدواژهها English
ب)لاتین
BAE, Y, The Money Demand Function and Nonlinear Cointegration, Columbus: Ohio State University, 2005.
BAILEY, M. J, The welfare cost of inflationary finance, Journal of Political Economy, 1956, 64:93.110.
CAGAN, P, The Monetary Dynamics of Hyperinflation. In Milton Friedman, Ed. Studies in the Quantity Theory of Money, Chicago: University of Chicago Press, 1956.
DOTSEY, M. and IRELAND, P. N, The Welfare Cost of Inflation in General Equilibrium, Journal of Monetary Economics, 37, 1996, 29-47.
FISCHER, S, Towards an Understanding of the Costs of Inflation: II, Carnegie- Rochester Conference Series on Public Policy, 15, 1981, 5-41.
FRIEDMAN, M, Essays in Positive Economics, University of Chicago Press, 1953.
FRIEDMAN, M, optimum quantity of money, In the Optimum Quantity of Money and Other essays, Chicago: Aldine Publishing Company, 1969.
GUPTA & UWILINGIYE, Measuring the Welfare Cost of Inflation in South Africa, South African Journal of Economics, Vol 76, 2008, No. 1, 16-25.
IRELAND, P.N, On welfare cost of inflation and the recent behaviour of Money Demand, Working paper Department of Economics, Boston College, 2007.
JOHANSEN, S, Likelihood-based Inference in Cointegrated Vector Autoregressive Models, Oxford: Oxford University Press, 1995.
Lucas Robert E. and Stocky Nancy L, Optimal Fiscal and Monetary Policy in An Economy Without Capital, Journal of Monetary Economics, 12, 1983, 4-141.
LUCAS, R. E. Jr, Inflation and Welfare, Econometrica, 68, 2000, 74-247.
McCallum,B. & Goodfrind M, Demand for Money: Theoretical Studies, The New Palgrave Dictionary, 1987, 775-781.
SERLETIS, A. & YAVARI, K, The welfare cost of inflation in Canada and the United States, Economics Letters, 84, 2004, 199-204.
TOBIN, J, Inflation and Unemployment in, American Economic Review, Vol 62, 1972, No 15.
Turan G, U.S. Money Demand and the Welfare Cost of Inflation in a Currency - Deposit Model, Vol. 52, 2000, 233-258.
