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ZERO INFLATION: TRANSITION COSTS AND SHOE LEATHER BENEFITS
Author(s) -
Carlstrom CHARLES T.,
Gavin WILLIAM T.
Publication year - 1993
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1993.tb00367.x
Subject(s) - economics , inflation (cosmology) , recession , zero (linguistics) , argument (complex analysis) , price of stability , monetary economics , keynesian economics , monetary policy , econometrics , linguistics , philosophy , physics , biochemistry , chemistry , theoretical physics
The idea that the monetary authority cannot achieve price stability except at the cost of a recession is the most common and convincing argument against price stability. This paper presents calculations showing that the resource costs of a recession that might result from eliminating a 4 percent inflation are approximately equal to the “shoe leather” costs incurred when inflation is stable at 4 percent.