TY  - BOOK
AU  - Ireland,Peter N.
ED  - National Bureau of Economic Research.
TI  - On the Welfare Cost of Inflation and the Recent Behavior of Money Demand
T2  - NBER working paper series
PY  - 2008///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - June 2008; Hardcopy version available to institutional subscribers
N2  - Post-1980 U.S. 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 semi-elasticity 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
UR  - https://www.nber.org/papers/w14098
UR  - http://dx.doi.org/10.3386/w14098
ER  -