We show that the area under the long-run demand curve for money approximates the welfare cost of inflation for a large class of inventory theoretical models of money demand. The class of inventory models considered has a general stochastic structure of the net cash expenditures, as well as of the fixed/variable cost of withdrawing and depositing money. Thus, our framework nests a large number of models that have been studied in the literature. The results complement those obtained by Lucas (2000) for money-in-the-utility function and for shopping-time models.
|Titolo:||Cost of inflation in inventory theoretical models|
|Data di pubblicazione:||2019|
|Appare nelle tipologie:||01.1 - Articolo su rivista (Article)|
File in questo prodotto:
|article_proofs_cost_of_inflation.pdf||Documento in Pre-print||NON PUBBLICO - Accesso privato/ristretto||Administrator|