The Welfare Cost of Inflation and Stability of Money Demand

The Global Journal of Finance and Economics, Vol. 9, No. 2, p. 65-73, 2012

9 Pages Posted: 25 Jan 2017

See all articles by Neal Maroney

Neal Maroney

University of New Orleans - College of Business Administration

J. Rubio

NYU Polytechnic School of Engineering - Department of Finance and Risk Engineering

Date Written: 2012

Abstract

The cost of the FED maintaining a low target level of inflation is measured by Lucas (2000) and Ireland (2009) as the welfare cost of inflation based on money demand. Their estimates require stability of the money demand function. Ireland finds that money demand in the post-Volcker period is surprisingly stable, but the introduction of new time series datacasts doubt on the stability of money demand and therefore on the applicability of money demand based welfare cost measures of inflation to the post-Volcker period.

Keywords: Inflation, Inflation Cost

JEL Classification: E00, E31, E41

Suggested Citation

Maroney, Neal and Rubio, J., The Welfare Cost of Inflation and Stability of Money Demand (2012). The Global Journal of Finance and Economics, Vol. 9, No. 2, p. 65-73, 2012, Available at SSRN: https://ssrn.com/abstract=2905220

Neal Maroney

University of New Orleans - College of Business Administration ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

J. Rubio (Contact Author)

NYU Polytechnic School of Engineering - Department of Finance and Risk Engineering ( email )

Brooklyn, NY 11201
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
17
Abstract Views
230
PlumX Metrics