Replication data for: On the Welfare Cost of Inflation and the Recent Behavior of Money Demand

Principal Investigator(s):  View help for Principal Investigator(s) Peter N. Ireland

Version:  View help for Version V1

Name File Type Size Last Modified
LICENSE.txt text/plain 14.6 KB 10/12/2019 04:59:AM
dols.m text/plain 6.5 KB 10/12/2019 04:59:AM
figs12.xls application/vnd.ms-excel 87.5 KB 10/12/2019 04:59:AM
notes4.pdf application/pdf 79.8 KB 10/12/2019 04:59:AM
philou.m text/plain 6.3 KB 10/12/2019 04:59:AM
philper.m text/plain 5.1 KB 10/12/2019 04:59:AM
quarterly.dat text/plain 5 KB 10/12/2019 04:59:AM
readme.pdf application/pdf 19.8 KB 10/12/2019 04:59:AM

Project Citation: 

Ireland, Peter N. Replication data for: On the Welfare Cost of Inflation and the Recent Behavior of Money Demand. Nashville, TN: American Economic Association [publisher], 2009. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113298V1

Project Description

Summary:  View help for Summary Post-1980 US data trace out a stable long-run money demand relationship of Cagan's semi-log form between the M1-income ratio and the nominal interest rate, with an interest semielasticity below 2. Integrating under this money demand curve yields estimates of the welfare costs of modest departures from Friedman's zero nominal interest rate rule for the optimum quantity of money that are quite small. The results suggest that the Federal Reserve's current policy, which generates low but still positive rates of inflation, provides an adequate approximation in welfare terms to the alternative of moving all the way to the Friedman rule. (JEL E31, E41, E52)

Scope of Project

JEL Classification:  View help for JEL Classification
      E31 Price Level; Inflation; Deflation
      E41 Demand for Money
      E52 Monetary Policy


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V1 [2019-10-12]

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