Shoe-Leather Costs Reconsidered

Jagjit Chadha (), Andrew G Haldane and Norbert G J Janssen

Economic Journal, 1998, vol. 108, issue 447, pages 363-82

Abstract: R. E. Lucas (1995) has recently suggested that the 'shoe-leather' costs of inflation may amount to as much as 1 percent of GNP in the United States when moving to the Friedman optimum. The authors assess his thesis using empirical evidence for the United Kingdom over the period 1870-1994. They find support for Lucas's proposition--that interest rates should be specified in logs--as a description of money demand dynamics but not as a steady-state characterization. Although Lucas's estimates can be corroborated, a semilog interest rate specification implies smaller, though still tangible, welfare gain estimates: for example, 0.22 percent of GNP in perpetuity when moving from 6 percent to 2 percent nominal interest rates.

Date: 1998
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/servlet/useragent ... =447&year=&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Shoe-leather costs reconsidered
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... al.asp?ref=0013-0133

Access Statistics for this article

Economic Journal is edited by Antonio Ciccone, Leonardo Felli, Steve Machin, Andrew Scott, Steve Pischke and David Myatt

More articles in Economic Journal from Royal Economic Society
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().