Volume 5, Issue 15 (3-2014)                   jemr 2014, 5(15): 43-71 | Back to browse issues page

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izadkhasti H, samadi S, dallali R. A Comparative Analysis Welfare Cost of Inflation Taxin Partial and General Equilibrium Models. jemr 2014; 5 (15) :43-71
URL: http://jemr.khu.ac.ir/article-1-662-en.html
A Comparative Analysis Welfare Cost of Inflation Taxin Partial and General Equilibrium Models
Hojjat Izadkhasti * 1, Said Samadi2 , Rahim Dallali2
1- Isfahan University , : izadkhasti321@ gmail.com
2- Isfahan University
Abstract:   (8899 Views)
Money is a facilitator of economic activities, thus, formatting of economic activity is dependent on the institutionalizing of monetary system. In common monetary system, the weakness of common perception about money, publishing and distributing mechanism led to inefficiencies in optimal allocation of resources and welfare cost of inflation tax. Partial equilibrium model in compare with general equilibrium model, underestimate welfare cost of inflation tax. Therefore, in dynamic optimization model, the equation of welfare cost of inflation tax, in addition to general equilibrium model of Lucas, derived from theoretical correction of demands for real money balances. Then welfare cost compared theoretically and experimentally in partial and general equilibrium model. Theoretical and experimental results indicate that the welfare costs of inflation tax in general equilibrium models, is an upper bound of partial equilibrium models. Also, given that the elasticity of demand for money in regard to the nominal interest rate, the welfare cost of inflation tax increases with nominal interest rate and inflation.
Keywords: Inflation tax, Welfare, Nominal interest rate, Optimum quantity of money
Full-Text [PDF 630 kb]   (2714 Downloads)    
Type of Study: توسعه ای | Subject: پولی و مالی
Received: 2013/02/7 | Accepted: 2013/06/8 | Published: 2014/09/14
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