This paper seeks to quantify and measure welfare costs resulting from inflation.In other words, by making use of Iran’s economy data and models related to welfare cost of inflation, this study aims at identifying the relation between inflation and welfare in Iran’s economy.Thus, a money demand function has been defined for Iran’s money market on which the welfare cost of inflation between 1990-2008 has been estimated. First, we investigate the long-term relationship between money to GDP with interest rate for opportunity cost of holding money, by using Dickey-Fuller unit root and Johansson co-integration method. Then, we calculate welfare cost of inflation using consumer’s surplus method and on the basis of the reverse money demand function and Lucas’s logarithmic (2000) as well as Cagan’s semi-logarithmic (1956) patterns for various inflation and interest rates.According to the inflation and interest rate averages in the above mentioned period, namely 19.06 and 18.41 respectively, this study calculates the welfare cost on both logarithmic and semi-logarithmic models as 3.54 and 1.42 to GDP respectively. In addition, inflation welfare cost curve for the mentioned time has been almost without slope and the trend has been stable within both models.

Inflation has negative effects on economic welfare in different ways. In other words, it may cause welfare costs for society. Many studies indicate that there is a positive and statistically significant relationship between monetary policy and inflation, particularly in developing countries including Iran. Estimation of welfare cost of inflation may help policy makers as well as monetary authorities to evaluate the welfare effects of their policies and decide how to proceed. This paper defines a money demand function for Iran's money market, then by applying advanced econometrics techniques and based on Lucas Logarithmic model (2000) and Caygan’s semi log version (1956), the welfare cost of inflation is estimated for the period of 1958-2007.The results indicate that if the inflation rate increase from 3 percent to 15 percent, the welfare cost of inflation based on the logarithmic model would increase from 0.14 percent of GDP to 1.7 percent of GDP and based on the semi logarithmic model, from 0.12 GDP to 2.3 percent of GDP. The paper argues that the semi logarithmic model is more appropriate for calculating welfare cost of Inflation in Iran.

Over the past decades, research on the welfare costs of inflation has become a significant area in monetary economics and, consequently, an important subject in macroeconomics. The welfare cost of inflation refers to changes in welfare caused by inflation and represents the damages inflicted by inflation through the monetary channel. Accordingly, this study aims to examine the welfare cost of inflation in a steady-state environment using a general equilibrium model approach for the Iranian economy. In this framework, money is introduced into the model through a cash-in-advance constraint. The results obtained from the model calibration indicate that with an increase in the monetary growth rate—and consequently the inflation rate—employment, output, and welfare income in the steady state decline. Furthermore, when the inflation rate is reduced from the benchmark level to the quarterly inflation target of 2%, the welfare gain would be equivalent to 0.11 percent of consumption. Therefore, based on the findings, it is recommended that due to the impact of monetary policies on welfare, the efficiency of monetary policy should be given due attention.

At the current time product costing, is simply the sum of direct materials, direct labor and overhead. The costing is the process of determining the cost of the costing issue that its issue can be good or service. The classic view is based on the volume and in the allocation of overhead neglect to activities and it is causing distorted of costing. A modern view and based on activity and in the allocation of overhead is neglect to inflation, therefore it is not suitable for swollen countries. The basic question in the present study is how to allocation of overhead based on activity in the condition of inflation. In the present study, while explaining the classic and modern views on the allocation of overhead and the expression of the strengths and weaknesses of them attempts developing to activity and inflation based view in the allocation of overhead to cost object then we explaining tree new version of costing systems based on activity and inflation based view for the first time. The results of the research indicates that the costing systems based on over modern view includs: inflation and activity based costing time driven inflation and activity based costing and light inflation and activity based costing is very suitable for swollen countries because in the allocation of overhead cosidered to inflation and activity.