Replication data for: Rebalancing Frequency and the Welfare Cost of Inflation
Principal Investigator(s): View help for Principal Investigator(s) André C. Silva
Version: View help for Version V1
Name | File Type | Size | Last Modified |
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AEJMacro20090181SilvaDataAndPrograms | 10/25/2021 01:59:PM | ||
LICENSE.txt | text/plain | 14.6 KB | 10/12/2019 05:26:PM |
Project Citation:
Silva, André C. Replication data for: Rebalancing Frequency and the Welfare Cost of Inflation. Nashville, TN: American Economic Association [publisher], 2012. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114242V1
Project Description
Summary:
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Cash-in-advance models usually require agents to reallocate money and bonds in fixed periods. Every month or quarter, for example. I show that fixed periods underestimate the welfare cost of inflation. I use a model in which agents choose how often they exchange bonds for money. In the benchmark specification, the welfare cost of 10
percent instead of 0 inflation increases from 0.1 percent of income
with fixed periods to 1 percent with optimal periods. The results are robust to different preferences, to different compositions of income in bonds or money, and to the introduction of capital and labor. (JEL: E30, E40, E50)
Scope of Project
Subject Terms:
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macroeconomics;
demand for money;
cash-in-advance models;
portfolio rebalancing;
inflation;
monetary economics;
welfare cost of inflation;
market segmentation;
monetary policy
JEL Classification:
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E30 Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E40 Money and Interest Rates: General
E50 Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E30 Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E40 Money and Interest Rates: General
E50 Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Geographic Coverage:
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United States
Time Period(s):
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1/1900 – 12/1997
Universe:
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The aggregate economy, composed of individual agents and firms.
Data Type(s):
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aggregate data
Methodology
Data Source:
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Bureau of the Census (1975), Historical Statistics of the United States: Colonial Times to 1970. Friedman and Schwartz (1982), Monetary trends in the United States and the United Kingdom: their relation to income, prices and interest rates, 1875-1975, Chicago: University of Chicago Press. U.S. Bureau of Economic Analysis, NIPA Tables. Economic Report of the President. Federal Reserve Bank of St. Louis FRED dataset.
Unit(s) of Observation:
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individuals,
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