Shoe‐leather Costs Reconsidered
Year: 1998
Type: article
Abstract: 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 U.K. 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%.
Source: The Economic Journal
Institution: Bank of England
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3122744394