Dynamic Shoe-Leather Costs in a Shopping-time Model of Money
نویسنده
چکیده
A general-equilibrium shopping-time model ofmoney demand is used to obtain estimates ofsome dynamic costs ofinflation under alternative monetary policy rules. After examining the welfare implications ofsteady-state inflation, dynamic welfare costs are evaluated for inflation-targeting and price-level targeting regimes in a stochastic setting in which agents are uncertain about the underlying inflation trend. The regimes are distinguished by the presence or absence ofa unit root in the money supply and the price level. Uncertainty about the underlying inflation rate is introduced as a mechanism for modeling the role ofpolicy credibility. *The views expressed in this paper are those ofthe author, and do not necessarily represent official positions ofthe Federal Reserve Bank ofSt. Louis or the Federal Reserve System. Dynamic Shoe-Leather Costs in a Shopping-Time Model ofMoney
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