This paper evaluates the costs of inflation in Australia and New Zealand using a compensated measure calculated by calibrating a general equilibrium search model in the vein of Lagos and Wright (2005). We look at how inflation affects the intensive margin (the quantity traded in each match) by...

In most macroeconomic models inflation tends to be harmful. In this paper we show that by simply changing the timing of production decisions by firms from “on demand” to “in advance”, some inflation can boost welfare as long as goods are sufficiently perishable. The main conclusion from...