The welfare cost of inflation under imperfect insurance
University of Southern California
Heterogeneous agent model with idiosyncratic employment risk, precautionary money demand for consumption smoothing, no insurance markets, liquidity constraints preventing borrowing
Table 1 p.87 and Section 4.2 p.88-89
Zero inflation benchmark economy used for welfare comparison
Zero inflation serves as the welfare benchmark against which 5% and 10% inflation costs are measured