The Long-Run Costs of Higher Inflation-Reference-Cited by-同舟云学术

The Long-Run Costs of Higher Inflation

Published:2023-10-17 Issue:2023-17 Volume: Page:
ISSN:2163-3738
Container-title:Economic Commentary (Federal Reserve Bank of Cleveland)
language:en
Short-container-title:EC (FRB Cleveland)

Author:

L'Huillier Jean-Paul¹^ORCID,DeLuca Martin J.¹

Affiliation:

1. Federal Reserve Bank of Cleveland

Abstract

This Economic Commentary provides an overview of several frictions and the channels through which they affect economic welfare under elevated trend inflation above 2 percent. These frictions, associated with financial transactions, price and wage stickiness, and cognitive limitations, suggest that inflation imposes significant costs on society. Higher inflation may lead to a steeper Phillips curve, a situation which increases the volatility of inflation and interest rates.

Publisher

Federal Reserve Bank of Cleveland

Subject

General Medicine

Reference9 articles.

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