| Sumario: | The writer considers partial and general equilibrium estimates of the welfare cost of inflation. Reserve banks all over the world have been tending toward zero inflation policies, but confusion obscures the welfare cost of sustaining such inflation policies in spite of the best attempts at clarification. Monetary theory research has moved from partial to general equilibrium economies, a move that has left the partial equilibrium estimates of the welfare cost of inflation beneath most of the general equilibrium estimates. When placed on a comparable basis, partial equilibrium estimates compare more proximately with the general equilibrium estimates. In addition, evidence implies that integration under the money demand function seems to be applicable in general equilibrium economies. Moreover, the estimates rely on the elasticities of money demand and the underlying structural parameters.
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