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How Costly Is Sustained Low Inflation for the U.S. Economy?

Resource Type
Dataset : survey data
  • Bullard, James B. (Federal Reserve Bank of St. Louis)
  • Russell, Steven (University of Indiana, Purdue University)
Other Title
  • Version 1 (Subtitle)
Publication Date
Free Keywords
economic sectors; inflation; national economy
  • Abstract

    The authors study the welfare cost of inflation in a general equilibrium life-cycle model that includes households that live for many periods, production and capital, simple monetary and financial sectors, and a fairly elaborate government sector. The government's taxation of capital income is not indexed for inflation. They find that a plausibly calibrated version of this model has a steady state that matches a variety of facts about the postwar U.S. economy. They use the model to estimate the welfare cost of permanent, policy-induced changes in the inflation rate and find that most of the costs of inflation are direct and indirect consequences of the fact that inflation increases the effective tax rate on capital income. The cost estimates are an order of magnitude larger that other estimates in the literature.
  • Table of Contents


    • DS1: Dataset
Geographic Coverage
  • United States
Collection Mode
  • The file submitted is the program file 0405jbp.prg. These data are part of ICPSR's Publication-Related Archive and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.

This study is freely available to the general public via web download.
Alternative Identifiers
  • 1302 (Type: ICPSR Study Number)
  • Bullard, James B., Russell, Steven. How Costly Is Sustained Low Inflation for the U.S. Economy?. Federal Reserve Bank of St. Louis Review.86, (3), 35-67.2004.

Update Metadata: 2015-08-05 | Issue Number: 6 | Registration Date: 2015-06-15

Bullard, James B.; Russell, Steven (2004): How Costly Is Sustained Low Inflation for the U.S. Economy?. Version 1. Version: v1. ICPSR - Interuniversity Consortium for Political and Social Research. Dataset.