It has recently been suggested by Robert Lucas that `shoe-leather' costs of inflation may amount to as much as 1% of GNP in the United States. This paper assesses the UK evidence for the period 1970-1994. Similar estimates to those of Lucas are found using his original specification, but a preferred functional form using a semi-log interest elasticity of demand for money reveals a 0.22 % of GNP gain in perpetuity following a sustained fall in nominal interest rates from 6% to 2%.
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Article
Chadha, Jagjit S & Haldane, Andrew G & Janssen, Norbert G J, 1998.
"Shoe-Leather Costs Reconsidered,"
Economic Journal,
Royal Economic Society, vol. 108(447), pages 363-82, March.
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Chadha, Jagjit S & Haldane, Andrew G & Janssen, Norbert G J, 1998.
"Shoe-Leather Costs Reconsidered,"
Economic Journal,
Royal Economic Society, vol. 108(447), pages 363-82, March.
[Downloadable!] (restricted)
Other versions:
Robert J. Shiller, 1997.
"Why Do People Dislike Inflation?,"
NBER Chapters,
in: Reducing Inflation: Motivation and Strategy, pages 13-70
National Bureau of Economic Research, Inc.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)