Economics at your fingertips  

Shoe-Leather Costs Reconsidered

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

Economic Journal, 1998, vol. 108, issue 447, 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
References: Add references at CitEc
Citations View citations in EconPapers (14) Track citations by RSS feed

Downloads: (external link) ... =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 (1998) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

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 currently edited by Martin Cripps, Steve Machin, Woulter den Haan, Andrea Galeotti, Rachel Griffith and Frederic Vermeulen

More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Series data maintained by Wiley-Blackwell Digital Licensing ().

Page updated 2017-09-29
Handle: RePEc:ecj:econjl:v:108:y:1998:i:447:p:363-82