Seigniorage and the welfare cost of inflation: Evidence from an intertemporal model of money and consumption
AbstractThis paper empirically investigates the restrictions embodied in a popular dynamic monetary model for the cross relations between consumption, money holdings, inflation and assetsâ returns using quarterly data for the high-inflation economy in Israel, 1970â1988. The model considered includes money in agentsâ utility function. A set of the estimated parameters is used in the analysis to assess the modelâs quantitative implications for seigniorage and for the welfare costs of inflation. The estimates are found to account well for the observed stability over time of seigniorage in Israel and imply sizeable welfare costs of inflation.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 29 (1992)
Issue (Month): 3 (June)
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Web page: http://www.elsevier.com/locate/inca/505566
Other versions of this item:
- Eckstein, Z. & Leiderman, L., 1991. "Seignorage and the Welfare Cost of Inflation; Evidence from an Intertemporal Model of Money and Consumption," Papers 7-91, Tel Aviv.
- Zvi Eckstein & Leonardo Leiderman, 1991. "Seigniorage and the welfare cost of inflation: evidence from an intertemporal model of money and consumption," Discussion Paper / Institute for Empirical Macroeconomics 40, Federal Reserve Bank of Minneapolis.
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