Shoe-leather costs reconsidered
Jagjit Chadha (),
Andrew Haldane and
Bank of England working papers from Bank of England
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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Journal Article: Shoe-Leather Costs Reconsidered (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:boe:boeewp:86
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