ZERO INFLATION: TRANSITION COSTS AND SHOE LEATHER BENEFITS

Charles Carlstrom and William Gavin ()

Contemporary Economic Policy, 1993, vol. 11, issue 1, 9-17

Abstract: The idea that the monetary authority cannot achieve price stability except at the cost of a recession is the most common and convincing argument against price stability. This paper presents calculations showing that the resource costs of a recession that might result from eliminating a 4 percent inflation are approximately equal to the “shoe leather” costs incurred when inflation is stable at 4 percent.

Date: 1993
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https://doi.org/10.1111/j.1465-7287.1993.tb00367.x

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Working Paper: Zero inflation: transition costs and shoe-leather benefits (1991)
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