US overestimates welfare costs of inflation: Bank of Italy paper


A Bank of Italy paper published on Wednesday says failure to account for currency held by non-residents may lead to a significant overestimation of the welfare costs associated with inflation in the United States.

The paper's authors, Alessandro Calza and Andrea Zaghini, present new evidence on the shoe-leather costs of inflation using monetary data adjusted for the circulation of currency abroad. They note that the data on M1 - a broad money aggregate which includes physical currency such as

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