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Author(s) / Editor(s): 
  • Martha Rosalba Lopez

Seigniorage and the Welfare Cost of Inflation in Colombia

We compute both seigniorage rate and  welfare cost of inflation rate in Colombia using a  Sidrauski-type model  in which preferences are separable functions of the service flows of  non-durable goods and  money holdings.  The set of the estimated parameters imply sizeable welfare cost of inflation  and  seigniorage rates. However,  eventhough for low inflation rates seigniorage rate markedly increases with the rate of inflation,  for very high inflation rates it reaches an asymptote.