@TechReport{iza:izadps:dp4559,
            	author={Janiak, Alexandre and Monteiro, Paulo Santos},
            	title={Inflation and Welfare in Long-Run Equilibrium with Firm Dynamics},
            	year={2009},
	month={Nov},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={4559},
            	url={https://www.iza.org/publications/dp4559},
	abstract={We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. The model is calibrated to the United States economy and the long-run equilibrium properties are compared at low and high inflation. We find that, when the period over which the cash-in-advance constraint is binding is one quarter, an annual inflation rate of 10 percent leads to a decrease in the steady-state average productivity of roughly 0.5 percent compared to the optimum's steady-state. This decrease in productivity is not innocuous: it leads to a doubling of the welfare cost of inflation.},
	keywords={inflation;productivity;firm dynamics;welfare},
            }