This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces transaction costs, a fall in the costs of in

We use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized Baumol-Tobin model. Our data set contai

'This paper calculates the welfare cost of inflation by focusing on distortions and costs that inflation poses on households who use money for transactions to a