Cost of inflation in inventory theoretical models
2018; Elsevier BV; Volume: 32; Linguagem: Inglês
10.1016/j.red.2018.11.001
ISSN1096-6099
AutoresFernando Álvarez, Francesco Lippi, Roberto Robatto,
Tópico(s)Economics of Agriculture and Food Markets
ResumoWe 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.
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