The organization of the paper is simple. We start by examining the real effects of anticipated inflation in an economy … that has fully adapted to inflation. In particular, in this economy: (i) public institutions are fully attuned to inflation … (or inflation proof), (ii) the same is true of private institutions, (iii) current and future inflation is fully reflected …

cost of inflation for the US economy using a flexible time-varying cointegration methodology to estimate the money demand … estimate of the welfare cost of inflation for a 10-percent inflation rate lies in the range of 0.025 to 0.75 percent of GDP and … averages 0.27 percent. In sum, our findings fall well within the ranges of existing studies of the welfare cost of inflation …